Vol. 9 No. 1 (2021): Business & Management Studies: An International Journal
Articles

Impact of corporate insider on insider trading: Evidence from Pakistan stock exchange

PDF
  • Bismah Rao
Bismah Rao
Iqra University
DOI: https://doi.org/10.15295/bmij.v9i1.1789

Published 2021-03-25

Keywords

  • İçeriden Öğrenenler, İçeriden Öğrenenlerin Ticareti, Yönetim Kurulu Sahipliği
  • Corporate Insiders, Insider Trading, Director’s Ownership

How to Cite

Rao, B. (2021). Impact of corporate insider on insider trading: Evidence from Pakistan stock exchange. Business & Management Studies: An International Journal, 9(1), 295–306. https://doi.org/10.15295/bmij.v9i1.1789

Copyright (c) 2021 Bismah Rao

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Abstract

The purpose of this study is to investigate the impact of a corporate insider on insider trading in Pakistan. For this purpose, 30 top firms will be extracted from 540 Listed Firms on Pakistan Stock Exchange, and their data from the last five years will be used in this study. This research will measure the variables by the method of Logit Regression Analysis. The result shows that Directors’ ownership has optimistic and Audit firms hurt insider trading, whereas the remaining four variables had no impact on insider trading. This research is just limited to Pakistan’s listed firms with limited variables and restricted sample size.

PDF

Downloads

Download data is not yet available.

References

  1. Ali, U., & Hirshleifer, D. (2017). Opportunism as a firm and managerial trait: Predicting insider trading profits and misconduct. Journal of Financial Economics, 126(3), 490-515. DOI:10.1016/j.jfineco.2017.09.00
  2. Arif, S., Kepler, J., Schroeder, J. H., & Taylor, D. (2018). Audit Process, Private Information, and Insider Trading. SSRN Electronic Journal. doi:10.2139/ssrn.3264424
  3. Berkman, H., Koch, P., & Westerholm, P. J. (2018). Personal Trading by Brokers, Analysts, and Fund Managers. SSRN Electronic Journal. DOI:10.2139/ssrn.3280610
  4. Bricker, R., & Markarian, G. (2015). Institutional Investors and Insider Trading Profitability. European Accounting Review, 24(3), 495-518. DOI:10.1080/09638180.2015.1040045
  5. Chi, S., & Prentice, J. (2017). Does Insider Trading Affect Auditors Risk Assessments? Evidence from Audit Pricing. SSRN Electronic Journal. DOI:10.2139/ssrn.3089444
  6. Chronopoulos, K., D., G., D., Papadimitriou, Tavakoli, & Manouchehr. (2018). Insider Trading and Future Stock Returns in Firms with Concentrated Ownership Levels. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3194095
  7. Dalko, V., & Wang, M. H. (2016). Why is insider trading law ineffective? Three antitrust suggestions. Studies in Economics and Finance, 33(4), 704-715. DOI: 10.1108/sef-03- 2016-0074
  8. Davis, F., Taghipour, B., & Walker, T. J. (2017). Insider trading surrounding securities class action litigation and settlement announcements. Managerial Finance, 43(1), 124-140. DOI: 10.1108/mf-05-2016-0129
  9. Davis, F., Taghipour, B., & Walker, T. J. (2017). Insider trading surrounding securities class action litigation and settlement announcements. Managerial Finance, 43(1), 124-140. DOI:10.1108/mf-05-2016-0129
  10. Faizan, R., & Haque, A.U. (2019). Working Efficiency of Contrasting Genders under Eustress, Distress, Hyper-Stress, and Hypo-Stress, Prabandhan: Indian Journal of Management, 12(11), 32-46.
  11. Gao, G., Ma, O. & Ng, D.T. (2015). The Sound of Silence: What Do we Know When Insiders Do Not Trade? Johnson School Research Paper, (3). Retrieved from https://dx.doi.org/10.2139/ssrn.2167998
  12. Gubler, Z. J. (2017). A unified theory of insider trading law. The George Town Law Journal, 105, 1225-1270. Retrieved from https://georgetownlawjournal.org/articles/233/unified-theory-of-insider/pdf
  13. Gupta, A. (2015). Price Impact of Block Trading on the Bombay Stock Exchange. The IUP Journal of Applied Finance, 21(3), 5-15. Retrieved from https://ssrn.com/abstract=2691376
  14. Gusakov, A., Haque, A.U., & Jogia, A.V. (2020). Mechanisms to Support Open Innovation in Smart Tourism Destinations: Managerial Perspective and Implications, Polish Journal of Management Studies, 21(2), 142-161.
  15. Haque, A.U., Yamoah, F., & Sroka, W. (2020). Willingness to Reduce Food Choice in Favour of Sustainable Alternatives: The Role of Government and Consumer Behaviour (chapter 3), In: W. Sroka (ed), Perspectives on Consumer Behaviour, Springer.
  16. Haque, A.U., Sher, A., & Urbański, M. (2020). Is the role of Authentic Leadership Effective in Managing Occupational Stress and Psychological Capital? Forum Scientiae Oeconomia, 8(2), 59-77.
  17. Hossain, M. M., Heaney, R. A., & Koh, S. (2016). Director trading, or lack thereof, and acquiring firm performance. Accounting Research Journal, 29(3), 332-347. DOI: 10.1108/arj-12-2014-0109
  18. Jain, P., & Sunderman, M. A. (2014). Stock price movement around the merger announcements: Insider trading or market anticipation? Managerial Finance, 40(8), 821-843. DOI: 10.1108/mf-09-2013-0256
  19. Kot, S., Haque, A.U., and Baloch, A. (2020). Supply Chain Management in SMEs: Global Perspective, Montenegrin Journal of Economics, 16(1), 87-104.
  20. Lee, I., Lemmon, M., Li, Y., & Sequeira, J. M. (2014). Do voluntary corporate restrictions on insider trading eliminate informed insider trading? Journal of Corporate Finance, 29, 158-178. DOI:10.1016/j.jcorpfin.2014.07.005
  21. McClure, B. (2019, March 12). How to use insider and institutional ownership. Retrieved from https://www.investopedia.com/articles/stocks/05/042605.asp
  22. Mobin, M. (2017). What is insider trading? Retrieved from https://www.dawn.com/news/1374308
  23. Morris, T., & Boubacar, H. (2018). Abnormal returns on Canadian insider purchases before press releases. Management Research Review. DOI: 10.1108/mrr-06-2017- 0192
  24. Rahman, M., Kamal, M. M., Aydin, E., & Haque, A. U. Impact of Industry 4.0 drivers on the performance of the service sector: comparative study of cargo logistic firms in developed and developing regions, Production Planning & Control, Special Issue, DOI: 10.1080/09537287.2020.1810758.
  25. Reeb, D. M., Zhang, Y., & Zhao, W. (2014). Insider Trading in Supervised Industries. The Journal of Law and Economics, 57(3), 529-559. DOI: 10.1086/678269
  26. Spaic, A., Braaten, C. A., Tsai, L. C., & Vaughn, M. S. (2019). Does insider trading pay? An analysis of trading and tipping activities in insider trading litigation. Journal of Financial Crime, 00-00. DOI:10.1108/jfc-07-2018-0068
  27. Ślusarczyk, B., & Haque, A.U. (2019). Public services for business environment: challenges for implementing Industry 4.0 in Polish and Canadian logistic enterprises. Administratie si Management Public, (33), pp. 57-76.
  28. Ślusarczyk, B., Tvaronaviciene, M., Haque, A.U., & Olah, J. (2020). Predictors of Industry 4.0 Technologies affecting logistic enterprises' performance: International perspective from economic lens, Technological and Economic Development, 26(2), 1-21, DOI: 10.3846/tede.2020.13376
  29. Wasiuzzaman, S., & Lim, K. H. (2017). Does institutional investors’ monitoring substitute for litigation in curbing insider trading? The case of Malaysia. Managerial Finance, 43(1), 141-151. DOI: 10.1108/mf-12-2015-0335
  30. Urbański, M., and Haque, A.U. (2020). Are You Environmentally Conscious Enough to Differentiate between Greenwashed and Sustainable Items? A Global Consumers Perspective, Sustainability, 12(5), 1-26.