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The Sarbanes‐Oxley act and informed trading in the options market: Evidence from share repurchase announcements

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  • Ihsan Badshah
  • Hardjo Koerniadi
  • James Kolari

Abstract

This study examines the informed options trading hypothesis before and after the implementation of the Sarbanes‐Oxley Act (SOX). We find that informed option trading, as measured by implied volatility spreads, occurs only in the period before the enactment of this Act but disappears thereafter. Our results suggest that the SOX had a significant impact on informed trading in U.S. option markets.

Suggested Citation

  • Ihsan Badshah & Hardjo Koerniadi & James Kolari, 2021. "The Sarbanes‐Oxley act and informed trading in the options market: Evidence from share repurchase announcements," International Review of Finance, International Review of Finance Ltd., vol. 21(2), pages 645-652, June.
    • Handle: RePEc:bla:irvfin:v:21:y:2021:i:2:p:645-652
    DOI: 10.1111/irfi.12281
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    References listed on IDEAS

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    Cited by:

    1. Ihsan Badshah & Hardjo Koerniadi & James Kolari, 2019. "Testing the Information-Based Trading Hypothesis in the Option Market: Evidence from Share Repurchases," JRFM, MDPI, vol. 12(4), pages 1-11, November.

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