The Deterrent Effect of Insider Trading Enforcement Actions
We analyze whether exposure to an SEC insider trading enforcement action affects how insiders trade. We find that following an insider trading enforcement action at one firm, exposed insiders earn significantly lower abnormal profits from their trades at other firms compared to non-exposed insiders....
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| Veröffentlicht in: | The Accounting review 2022-05, Vol.97 (3), p.227-247 |
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| container_end_page | 247 |
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| container_title | The Accounting review |
| container_volume | 97 |
| creator | Davidson, Robert H. Pirinsky, Christo |
| description | We analyze whether exposure to an SEC insider trading enforcement action affects how insiders trade. We find that following an insider trading enforcement action at one firm, exposed insiders earn significantly lower abnormal profits from their trades at other firms compared to non-exposed insiders. The deterrent effect is stronger when a fellow insider is convicted, and is similarly significant both pre- and post-SOX. Following the enforcement event, exposed insiders do not trade less frequently, but do trade significantly fewer shares per trade. Insiders who have witnessed an enforcement action have a lower probability for future conviction than their unexposed peers.
Data Availability: Data are available from the public sources cited in the text.
JEL Classifications: G14; G40; K42. |
| doi_str_mv | 10.2308/TAR-2020-0003 |
| format | Article |
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Data Availability: Data are available from the public sources cited in the text.
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Data Availability: Data are available from the public sources cited in the text.
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Data Availability: Data are available from the public sources cited in the text.
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| fulltext | fulltext |
| identifier | ISSN: 0001-4826 |
| ispartof | The Accounting review, 2022-05, Vol.97 (3), p.227-247 |
| issn | 0001-4826 1558-7967 |
| language | eng |
| recordid | cdi_proquest_journals_2668419774 |
| source | EBSCOhost Business Source Complete |
| subjects | Action Enforcement Insider trading Probability Profits Public Company Accounting Reform & Investor Protection Act 2002-US |
| title | The Deterrent Effect of Insider Trading Enforcement Actions |
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