The Study Of The Insider Trading And Regulation

Insider trading has become one of the most heavily regulated securities market transactions. It is known that the insiders squeeze abnormal profit with private information and this behavior reduces the information efficiency and appropriate resources, which will do the harm to the market. In fact, the efficiency of the insider trading regulation is not satisfactory, especially in China. Some scholars have viewed insider trading prohibitions unfavorably. This view finds its classic expression in the work of Manne (1966). One Manne's for allowing insider trading is that such trading allows the information to be impounded in the prices of securities and thus increase the efficiency of securities market. Another is that insider trading can improve the incentives of the managers.Based on the two contrary opinions, this thesis herein tries to analyze insider trading from economic aspect. First, we discuss the theories of objecting to prohibiting the insider trading, and point out the unreasonable aspects of them. And then, we analyze the necessity of supervision to insider trading from seven main aspects. Next, following conducting empirical studies of the insider trading in China's securities market and put up some policy suggestion as well as some ideas on against insider trading.