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Insider trading during the 2008 financial crisis

Author

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  • Naser Abumustafa
  • Salah Nusair

Abstract

The literature suggests that insider trading may outperform the stock market by buying or selling stocks of the company in the short run and/or long run. For this research, we construct a daily index consisting of the most liquid and large company for each tested market: New York Stock Exchange (NYSE) and Kuwait Stock Exchange (KSE) to test for insider trading. Our finding indicates that insider trading at NYSE and KSE outperform the market in the short run only. The results suggest that both types of insider trading, buying or selling, are profitable in the short run. At the same time, our results conclude that all insiders trading are not profitable in the long run. Stocks that were sold or bought by insiders underperform the market in the long run. We also conclude that both types of insider trading activities significantly increased during the last quarter of 2008 and the first 2 months of 2009 in both NYSE and KSE.

Suggested Citation

  • Naser Abumustafa & Salah Nusair, 2011. "Insider trading during the 2008 financial crisis," Applied Financial Economics, Taylor & Francis Journals, vol. 21(5), pages 301-307.
    • Handle: RePEc:taf:apfiec:v:21:y:2011:i:5:p:301-307
    DOI: 10.1080/09603107.2010.530217
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    Cited by:

    1. Rocco Caferra & Simone Nuzzo & Andrea Morone, 2023. "“Less is more” or “more is better”? The effect of asymmetric information distribution on market efficiency and wealth inequality," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 18(2), pages 233-250, April.
    2. Morone, Andrea & Caferra, Rocco, 2020. "Inequalities in financial markets: Evidences from a laboratory experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 88(C).

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