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- Title
The effect of cross-listing on insider trading returns.
- Authors
Chang, Millicent; Corbitt, Ross
- Abstract
Holding privileged positions within firms, insiders can acquire excessive private benefits based on their informational advantage. The bonding hypothesis suggests that this can be prevented when a firm is cross-listed on an exchange with higher regulatory and legal costs compared with its home exchange. When cross-listed insiders buy and sell shares, the returns earned are lower than in domestic firms. This difference is attributable to the increased shareholder protection in cross-listed firms that constrains the extraction of private benefits, such that when cross-listed insiders trade, they trade for non-informational reasons.
- Subjects
RATE of return; INFORMATION theory in economics; PRIVATE sector; HYPOTHESIS; LEGAL costs; INDUSTRIAL costs
- Publication
Accounting & Finance, 2012, Vol 52, Issue 3, p723
- ISSN
0810-5391
- Publication type
Article
- DOI
10.1111/j.1467-629X.2011.00415.x