Optimal contracting and insider trading restriction

Article Abstract:

Restrictions on trading by insider agents are analyzed using an optimal contracting framework. Prohibition of insider trading is shown to be Pareto preferred if, and only if, a revelation or moral hazard problem exists. If prohibition of insider trading is valuable, then trade registration with a delay is shown to be as valuable as complete prohibition. Short selling restrictions, however, are generally of less value than complete prohibition. Finally, regulation of insider agent trading by governmental institutions and/or professional associations is discussed. (Reprinted by permission of the publisher.)

Research, Short selling

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Bankruptcy and insider trading: differences between exchange-listed and OTC firms

Article Abstract:

Over the two-year period prior to the bankruptcy announcement, insider trading is significantly greater for OTC bankrupt firms, but not for exchange-listed firms, than for an industry-size matched sample of nonbankrupt firms. In addition, the level of insider selling increases over the final five months leading to the first public announcement of OTC firms. Finally, firms displaying the most negative price reaction over the announcement period are found to have a significantly larger proportion of insider selling than other firms. (Reprinted by permission of the publisher.)

Stock-exchange, Securities listing, Over-the-counter markets, Over the counter markets, Bankruptcy

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The intraday speed of stock price adjustment to major dividend changes: bid-ask bounce and order flow imbalances

Article Abstract:

The intraday stock price reaction to significant changes in dividend policy is investigated. Dividend increases or decreases elicit asymmetric market reactions. Market response to negative announcements on dividend changes are more pronounced and prolonged than are reactions to positive announcements. Results show that data from favorable dividend announcements are either expected or uniformly interpreted than data from unfavorable dividend announcements.

Prices and rates, Stocks, Dividends, Marketing research, Market research, Stock prices, Public opinion

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