Empirical Study On Insider Trading In China Stock Market

First ,the article gives a clear definition of insider trading and reviews the literatures on insider trading. After a introduction of the method of event study, the article chooses the stocks which have completed the non-tradable share reform and have the important events such as overall listing, assets injection, assets replacement, mergers and acquistions happened in 2007 as samples, and uses the method to analyze the fluctuations of abnormal returns and cumulative abnormal returns, and calculates the announcement effect and insider trading effect, to test the seriousness of the insider trading in China stock market. It shows that, before the announcement of the important event, the abnormal returns and cumulative abnormal returns have a clear fluctuation, we can see that, insider trading occurs before announcement day, it comes to the same conclusion in caculating the announcement effect and insider trading effect. In the end, this article points out that the huge returns, defects of corporate governance, too light of punishment, lack of supervising efficiency are the major reasons, and suggests some measures to prevent insider trading.