The Information Content of Registered Insider Trading Under Lax Law Enforcement
Bohl MT, Wisniewski TP
With the use of event study methodology, this paper examines abnormal returns following insider trading on the Warsaw Stock Exchange (WSE). The profits to informed investors appear to be substantially higher than estimates reported for mature markets. It is our contention that these profits are a manifestation of insufficient enforcement of insider trading regulations. To explore the origins of informational asymmetries we relate insider gains to firm and trade characteristics. As changes in shareholdings have to be disclosed promptly and the informational content of the insiders' trades is not instantly discounted in stock prices, outsiders who mimic the insiders' behavior are able to beat a benchmark portfolio. (c) 2005 Elsevier Inc. All rights reserved.
insider trading market efficiency transaction data Polish stock market efficient capital-markets stock-prices returns trades event