The Study Of Insider Trading Phenomenon And Suggestion In Security Market Of China

In the securities market, listed company is the maker of inside information. For theperson who knows the inside information has more advantages and much time to get the insideinformation than others, then they can plan and reaction for their own benefits earlier thanothers. In comparison, the other users who can’t forecast the future trend of enterprise maybecome passive. This kind of information asymmetry phenomenon can cause the stock pricerising or falling unusually before the information announced. The chinese securities market isin a weak position effective stage which the ture condition of the listed company cannot bemanifested by the stock price. The persons who know the inside information use it to earn highprofits. These actions not only destroy the market order but also bring tremendous losses toretail investors.There is a phenomenon that high percentage of shares and high percentage of matchcause insider trading in the securities market during these years. This paper used “EventMethod” to which from two aspects of high percentage of shares and high percentage of matchto analyze whether there are insider trading phenomenons before the major informationannounced. The study has practical significance because it studies on the insider trading froma new perspective. The article discusses the question from247Shanghai A-share listedcompanies in2010which get high percentage of shares and also from282Shanghai A-sharelisted companies which get high percentage of match during2000to2010as samples toanalyze the change of stock prices. Through analyzing the calculated T-test of CAR and thecurves of cumulative abnormal return and turnover rate, add to the calculated results of theinsider trading effect and announcement effects, we find that there is abnormally significantfluctuation on stock price before information disclosure. So we conclude that the listedcompanies may exist the insider trading phenomenon before the major information announced.At the end of the paper comes up with some suggestion to deal with the high percentage ofshares from two aspects which are “strengthen the supervision during regulatory windowperiod especially on regulatory object”,“remind people treat rationally” and “perfect thesystem of information-announced”. The paper also gives some suggestion from the“strengthen the supervision during window period”,“perfect the supervision system”,“highmatch perfect accounting standards”,“supervision on match price in order to meet market demand”.