Insider trading properties affect on information asymmetry
Summary
Previous research finds conflicting evidence for the effect of insider trading on an efficient
stock market. It could be a tool for insiders to signal the performance of the company or a tool
to make easy money off outsiders. In this paper we will try to identify which characteristics of
the inside trade has the most effect on the stock market efficiency to help policy makers create
effective regulations. This paper examines the effect of insider trading on the cumulative
abnormal returns (CAR) and information asymmetry exchange trades shares. It does so with
a simple OLS regression where the position of an insider within the firm and the volume traded
by the insider is regressed on the bid-ask spread and the CAR. The regression finds no
significant effect of position or volume on the CAR neither on the bid-ask spread. This
contradicts previous research and shows further research on this topic is necessary
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