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The performance of corporate legal insider trading in the Korean market

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  • Mazza, Paolo
  • Ruh, Benjamin

Abstract

In this paper, we investigate the performance of corporate legal insiders in the Korean market from January 2010 to December 2020. This market has received very little attention from the academic community, while being one of the leading emerging economies. As per prior studies, we consider mainly buy transactions in order to draw robust conclusions as to insiders’ performance, since sales transactions do not necessarily represent a strong signal from insiders, as different reasons could push an investor to close her position. Our three-level analysis allows us to conclude that corporate insiders in the Korean market do possess market timing skills that enable them to consistently outperform random, outside investors over time. However, we note that this market timing ability is, to a large extent, linked to the hierarchical level of the insider in question, and consequently to its access to more crucial information. This brings us to the conclusion that information asymmetry is not only important between corporate insiders and outsiders, but even within organizations.

Suggested Citation

  • Mazza, Paolo & Ruh, Benjamin, 2022. "The performance of corporate legal insider trading in the Korean market," International Review of Law and Economics, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:irlaec:v:71:y:2022:i:c:s0144818822000321
    DOI: 10.1016/j.irle.2022.106076
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    References listed on IDEAS

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    More about this item

    Keywords

    Insider; Korea; Simulation; Trader’s behavior; Position;
    All these keywords.

    JEL classification:

    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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