This empirical paper deals with the impacts of insider trading on the firms' share prices. The overall regulation of insider trading determines a certain reporting period in which trades have to be reported to the public. In Germany this subject was revised in 2004, which shall be analysed in this paper.
First, there is an overview of the current state of literature. The CAR (cumulative abnormal return), which serves as the respective measurement for examining the different impacts on the firm's value, is explained. Further, the paper presents impacts of announcement delays on the firm's share price as well as which kind of firms tend to have longer announcement delays than others.
Afterwards, this seminar paper tries to take into account the new regulation of reporting delays which was valid since October 2004. Therefore, the last chapter deals with the methodology of an event study to detect abnormal returns in insider trading and the regression approach to show dependencies between firm characteristics and reporting delays. Finally, a brief conclusion is presented, which gives recommendation for future actions.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Changes in reporting regulations in Germany
- Literature review
- Empirical analysis of insider trading and reporting delay
- Methodology
- Dataset
- Event study methodology
- Regression analysis
- Results and evaluation
- Event study results
- Regression results
- Methodology
- Conclusion and critical appraisal
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper empirically investigates the impact of insider purchases and sales on share prices and the factors influencing delays in their announcements. It aims to analyze the relationship between insider trading and firm value, considering the legal framework and reporting regulations in Germany.
- Impact of insider trading on share prices
- Determinants of reporting delays in insider trading announcements
- Analysis of German reporting regulations
- Application of event study and regression methodologies
- Evaluation of the effectiveness of insider trading regulations
Zusammenfassung der Kapitel (Chapter Summaries)
Introduction: This chapter introduces the concept of insider trading, highlighting its significant impact on share prices and firm value. It explains the asymmetric information advantage held by insiders and the resulting principal-agent problem. The chapter also provides context by mentioning the prevalence of insider trading regulations in many countries, particularly focusing on the German Securities Trading Act (Wertpapierhandelsgesetz) implemented in 2002 and revised in 2004. The introduction outlines the structure of the paper, previewing the literature review, the empirical analysis using an event study methodology and regression analysis, and the concluding remarks.
Changes in reporting regulations in Germany: This chapter delves into the specifics of the revisions made to German reporting regulations concerning insider trading in 2004. It would likely discuss the motivations behind these changes, potentially analyzing the effectiveness of the pre-2004 regulations and the shortcomings they aimed to address. The analysis might include a comparison of the regulatory environment before and after the revisions, exploring the impact on market transparency and the protection of investors. The chapter might also examine the practical implications of the new rules for firms and market participants.
Literature review: This chapter provides a summary of existing research on insider trading, potentially focusing on studies investigating the relationship between insider trading activity and market behavior. It would synthesize findings from previous empirical analyses, discussing various methodologies employed and their respective strengths and weaknesses. The literature review could also touch upon the various theoretical models used to explain insider trading behavior, identifying areas of consensus and disagreement within the academic community. It would serve as a foundation for the author's own empirical investigation.
Empirical analysis of insider trading and reporting delay: This chapter presents the core empirical findings of the study. It describes the dataset used, detailing the criteria for including specific firms and transactions. The methodology section would elaborate on both the event study used to detect abnormal returns related to insider trading activities and the regression analysis to identify correlations between firm characteristics and reporting delays. The results section would then present the key findings from both methods, offering a statistical analysis of the impact of insider trading on share prices and the factors explaining variations in reporting times.
Schlüsselwörter (Keywords)
Insider trading, directors' dealings, share prices, reporting delays, event study, regression analysis, German securities trading act (Wertpapierhandelsgesetz), asymmetric information, firm value, principal-agent problem, regulatory compliance.
Frequently asked questions about: Language Preview (OCR Data)
What is the main purpose of this document?
This document serves as a comprehensive language preview of an academic paper analyzing insider trading and reporting regulations in Germany. It includes the title, table of contents, objectives and key themes, chapter summaries, and keywords.
What topics are covered in the table of contents?
The table of contents lists the following main sections: Introduction, Changes in reporting regulations in Germany, Literature review, Empirical analysis of insider trading and reporting delay (including methodology and results), and Conclusion and critical appraisal.
What are the objectives and key themes of the paper?
The paper aims to empirically investigate the impact of insider purchases and sales on share prices and the factors influencing delays in their announcements. It focuses on analyzing the relationship between insider trading and firm value within the German legal framework and reporting regulations. Key themes include the impact of insider trading on share prices, determinants of reporting delays, analysis of German regulations, application of event study and regression methodologies, and evaluation of the effectiveness of insider trading regulations.
What is discussed in the "Introduction" chapter?
The introduction explains the concept of insider trading, highlighting its impact on share prices and firm value. It addresses the asymmetric information advantage held by insiders and the principal-agent problem. It also provides context regarding insider trading regulations in Germany, specifically the German Securities Trading Act (Wertpapierhandelsgesetz).
What does the chapter "Changes in reporting regulations in Germany" focus on?
This chapter focuses on the specifics of the revisions made to German reporting regulations concerning insider trading in 2004. It likely discusses the motivations behind these changes, analyzing the effectiveness of the pre-2004 regulations and their shortcomings. It might compare the regulatory environment before and after the revisions and examine the practical implications of the new rules for firms and market participants.
What is covered in the "Literature review" chapter?
The literature review summarizes existing research on insider trading, potentially focusing on studies investigating the relationship between insider trading activity and market behavior. It synthesizes findings from previous empirical analyses, discussing methodologies and theoretical models used to explain insider trading behavior.
What methodology is used in the "Empirical analysis of insider trading and reporting delay" chapter?
This chapter uses both an event study methodology to detect abnormal returns related to insider trading activities and a regression analysis to identify correlations between firm characteristics and reporting delays. The dataset and results from both methods are described and statistically analyzed.
What are some of the key words associated with this paper?
Key words include: Insider trading, directors' dealings, share prices, reporting delays, event study, regression analysis, German securities trading act (Wertpapierhandelsgesetz), asymmetric information, firm value, principal-agent problem, regulatory compliance.
- Citation du texte
- Anna Rottke (Auteur), 2016, Insider Trading and Directors‘ Dealings. An empirical investigation of the impacts of insider purchases and sales on share prices and the determinants of delays in their announcements, Munich, GRIN Verlag, https://www.grin.com/document/1565300
