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Article: Insider trading laws and stock markets around the world: an empirical contribution to the theoretical law and economics debate.
- Article from:
- Journal of Corporation Law
- Article date:
- January 1, 2007
- Author:
CopyrightCOPYRIGHT 2007 University of Iowa Journal of Corporation Law. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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ABSTRACT
The primary goal of this Article is to bring empirical evidence to bear on the heretofore largely theoretical law and economics debate about insider trading. The Article first summarizes various agency, market, and contractual (or "Coasian") theories of insider trading propounded over the course of this longstanding debate. The Article then proposes three testable hypotheses regarding the relationship between insider trading laws and several measures of stock market performance. Exploiting the natural variation of international data, the Article finds that more stringent insider trading laws are generally associated with more dispersed equity ownership, ...