Business, Management and Accounting
8 years ago

China's Insider Trading Ban Fails to Stop Profitable Large Shareholder Trades

China Journal of Accounting Research
Insider trading under trading ban regulation in China’s A-share market
Chafen Zhu, Li Wang

Paper Summary

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The study looked at how a trading ban in China affected insider trading by big shareholders in the stock market. It found that insider trading didn't happen during the ban because it was too risky. But, insider trades were still profitable outside the ban period. Insider trading before the ban was much more profitable than uninformed trading. The rules changed how insiders traded, but didn't stop them from trading with an advantage. The regulations didn't work well because of strict supervision and a lack of legal action and flexible monitoring.