The Empirical Research Of The Profits For Information Superiority Of Insider Trading

Since2006, Chinese regulators allowed the insiders(The company’s seniormanagements and the major shareholders of shares held certain proportion) buy orsell the shares of their own company in the market,at the same time the insiders wererequested to disclose their trading informations to the pubilcs in time.So it furtherperfects the information disclosure systems of listed companies in China securitiesmarket by limiting the short-term trading,setting insider trading sensitive periods anda series of laws and regulations.Whether the insiders trading can gain excess returnsby using their informations superiority under the background of economic systems inour country? What factors affect the excess returns of the insiders trading? Whetherthe excess returns of insider trading is one of the forms of insider control gain? Whatkind of effects is the role of ownership characteristics to insiders trading? Theseproblems is controversial and important problems, and so it become a research topicof my dissertation.Based on the datas of insiders trading disclosed by Shanghai and shenzhenstock exchange from2006to2012,This dissertation examine the excess returns ofinsiders trading of the listed companies and the timing ability of the insidersempirically;I get the evidences of the excess returns of insiders trading using theirinformation superiority by examining the negative relationship between theinformation asymmetry and excess earnings of insiders trading and the relationshipbetween the suspended events and excess earnings of insiders trading. Finally thepaper verify the influences of corporate governance to insider trading. The mainconclusions of the dissertation is as follows:1、Insiders trading is given priority to selling and the numbers of selling is threetimes about the numbers of buying similar to the study abroad. I find that it is moreprominent in excess earnings of insider selling than buying;Insiders’ buying used thethe valuation information advantage;The relationship between the excess returns ofinsiders buying and management compensations is significantly negative correlation.Also,I found that nearly80%of the insiders trading occurred in shenzhen market. 2、Based on the analysis of formation mechanism of insider trading，The paperreckoned that Insiders have information superiority,Insiders will trade to gain excessreturns using the opportunity of significant information announcements inappropriate conditions (for poor corporate governance environments).I Find themore opaque information environment, the higher the excess earnings of insidertrading by examining the relationship between the information asymmetry andexcess earnings of insiders trading; Also,I found40%of the company weresuspended before and after1month calendar time of the insider trading; The excessearnings of those companies suspended during the period [-20，20] is significanthight than The excess earnings of those companies not suspended.3、I found that the net buying rate is lower, the excess returns of buying ishighter compared with state-owned enterprises and private enterprises; the netselling rate is no significant difference,the excess returns of selling is lowercompared with state-owned enterprises and private enterprises;The greater theseparation of cash flow rights and control rights,The greater the insider net buyingrate and net selling rate;About the equity balances indexes,The accumulative stake of2-10big shareholders is higher than the controlling shareholder’s stake, the lowerthe insider trading rate.It means that the2-10big shareholders have checks andbalances the role of large shareholders.In this paper,the basic contribution is as follows:1、Through examining the relationship between the abnormal returns of insiderstrading and the environment informations(or the asymmetric information),I explainsthe reasons for the excess returns ofinsiders trading.2、Through examining of excess earnings of insider trading before and after thesuspended events,I provides new evidence of the excess returns of insiders tradingusing their information superiority.3、I study the relationship between ownership and insider trading more in-depthfrom the ownership of the property ownership, equity concentration, checks andbalances those are the essential feature of company ownership structure.4、This paper provided the meaningful international reference about the research for insider phenomenon and the research of corporate governance in emergingmarkets.