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The Impact of Regulations on the Informational Basis of Insider Trading

Author

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  • Aaron Gilbert

    (Auckland University of Technology, Department of Finance, Faculty of Business, Private Bag 92006, Auckland 1020, New Zealand.)

  • Alireza Tourani-Rad

    (Auckland University of Technology, Department of Finance, Faculty of Business, Private Bag 92006, Auckland 1020, New Zealand.)

Abstract

In this paper, we examine the impact of major regulatory changes in New Zealand on the profitability and informational basis of insider transactions. Legislation around the world appears to have tried to encourage insiders to trade only in specified instances. We examine the efficacy of this approach. We conclude that the law changes have had a negative impact on the profitability of insider trading and appear to have forced insiders to stop trading on the knowledge of upcoming price-sensitive events. The results show that well constructed insider-trading laws could be effective in minimising the most harmful aspects of insider trading.

Suggested Citation

  • Aaron Gilbert & Alireza Tourani-Rad, 2008. "The Impact of Regulations on the Informational Basis of Insider Trading," Australian Journal of Management, Australian School of Business, vol. 33(2), pages 407-435, December.
    • Handle: RePEc:sae:ausman:v:33:y:2008:i:2:p:407-435
    DOI: 10.1177/031289620803300210
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    References listed on IDEAS

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    10. Etebari, Ahmad & Tourani-Rad, Alireza & Gilbert, Aaron, 2004. "Disclosure regulation and the profitability of insider trading: Evidence from New Zealand," Pacific-Basin Finance Journal, Elsevier, vol. 12(5), pages 479-502, November.
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    Cited by:

    1. Robert E. Marks General Editor, 2008. "The Dominoes Fall: A Timeline of the Squeeze and Crash …," Australian Journal of Management, Australian School of Business, vol. 33(2), pages 0-19, December.
    2. Millicent Chang & Andrew B. Jackson & Marvin Wee, 2018. "A review of research on regulation changes in the Asia‐Pacific region," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(3), pages 635-667, September.

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