Advance disclosure of insider transactions: Empirical evidence from the Vietnamese stock market
We investigate the impact of legal insider trading announcements on stock returns in Vietnam. Vietnamese insiders must announce their trading intentions in advance as well as after the actual trade, which contrasts with the vast majority of countries where only post-trade announcement is mandatory....
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Veröffentlicht in: | International review of law and economics 2023-06, Vol.74, p.106137, Article 106137 |
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Hauptverfasser: | , |
Format: | Artikel |
Sprache: | eng |
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Zusammenfassung: | We investigate the impact of legal insider trading announcements on stock returns in Vietnam. Vietnamese insiders must announce their trading intentions in advance as well as after the actual trade, which contrasts with the vast majority of countries where only post-trade announcement is mandatory. This regulatory setting allows to put to test the predictions from the theoretical models of advance disclosures (Huddart et al., 2004, Lenkey, 2014). Consistent with the theoretical literature, we find that the abnormal returns are large and significant after the pre-trade announcement, showing that the market takes into consideration the information content of the insiders' intention to trade. In addition, no significant stock price effect is found after the announcement of the actual trade occurrence or cancellation. We argue in favor of the implementation of advance disclosure policies since they help mitigate the returns obtained by insiders, better share the profits with outsiders and contribute to a better information dissemination.
•We test the effect of insiders’ pre-trade announcements in the Vietnamese market.•The abnormal returns are large and significant after these announcements.•There is no significant stock price effect after the trade completion event.•Outsiders seem to trade upon the pre-trade announcement information.•They contribute to price discovery and annihilate the post-trade price effect. |
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ISSN: | 0144-8188 1873-6394 |
DOI: | 10.1016/j.irle.2023.106137 |