Current Situation, Causes And Supervision Of Insider Trading In China’s Stock Market

This paper first gives the definition of insider trading and its related concepts, andsummarizes the debate and disagreement of scholars on the prohibition of the insidertrading. From the behavior of insider trading, trading purpose, performance of the threeforms of insider trading, and analysis the main effects of insider trading behavior namely:damage to the fairness of the securities market and the efficiency of resource allocation,increase the volatility of the stock market and uncertainty, increased financing costs andmanagement listing Corporation risk.Select the year2012listing Corporation merger and reorganization, signed a majorcontract, bond issuance, the issuance of non-public shares, major events have significantimpact on stock prices for samples, the empirical use event study method to analyze thepresent situation of insider trading.Empirical results are as follows：(1) Before important events information disclosuredate, trading volume, high yield, days cumulative excess returns are more obviouschanges, the stock market does exist serious insider trading.(2) By engaging in insidertrading can still get beyond the average income market excess returns.(3) From eachkind of events are the empirical result is not difficult to see, insider trading effect allkinds of events are more serious, the M&A events accumulated excess returns ismaximum, insider trading areas, should be a priority among priorities of insider tradingregulation.Then，through law and economics paradigm to analyze the optimal regulation ofinsider trading. This paper points out that when the insider trading regulation underdeterrence, insider trading staff will participate in Insider Trading (which belongs toChina); when there is a moderate deterrence of insider trading regulation, will prohibitinsider trading; insider trading regulation deterrence when excessive, will enlarge theinsider trading.Finally, This paper puts forward some countermeasures and suggestions to improvethe regulation on insider trading: perfect the corporate governance structure, improve thelisting Corporation listing Corporation information disclosure system, strengthen the securities intermediary self-discipline, strengthen law enforcement and punishment, andincrease the probability of insider trading behavior punished and constantly improve theinsider trading laws in order to improve the efficiency of regulation.