| Insider trading refers to the behavior of directors,supervisors,senior management personnel,shareholders holding more than 5%of the listed company and related personnel to buy and sell the company's stock.China implemented the new "Company Law" and "Securities Law" on January 1,2006,abolished the restrictions on executive transactions in the old law,and allowed"directors,supervisors and managers of listed companies to buy and sell on the secondary market."Company shares",the promulgation of the new law,makes insider trading flourish in China.In the context of the separation of the two powers,the agency problem is almost an inevitable problem for most companies.Through the implementation of equity incentives,the personal interests of executives and the interests of the company are linked to mitigate the moral hazard and adverse selection of executives.Agency problem departs from the maximization of corporate and shareholder value.However,the motivation of insider trading includes not only the normal economic needs for liquidity requirements,venture capital investment,and signal transmission,but also the purpose of manipulating stock prices and obtaining excess returns through insider trading.Compared with the company's external investors,the insiders,especially the company's executives,give them the opportunity to directly or indirectly contact the company's important information,and as the producer and transmitter of the company's information,their rights and privileges give them the opportunity."Manipulate" the production process of information,obtain internal information in a timely manner,and obtain excess returns through stock trading.This has been confirmed by many scholars at home and abroad.Legal insider trading and illegal insider trading are two completely different concepts,and the latter is an illegal act and is explicitly prohibited.However,there is a certain relationship between the two.Gao Kun(2008)clearly pointed out the static coincidence and dynamic conversion relationship between them.The insider's information advantage enables it to obtain the company's major,non-public information in a timely manner.Information,through its valuation judgment and performance forecasting capabilities,stock trading in the secondary market can often obtain excess returns[1],which turns into illegal insider trading.Therefore,the supervisory authority must strengthen the restraint and supervision of legal insider trading,otherwise it is very easy to cause the former to switch to the latter.Strengthening the supervision of insider trading depends not only on external regulators,but also on corporate governance mechanisms.Institutional investors holding shares are an external governance mechanism.Since 1999,China has encouraged institutional investors to hold shares in order to achieve the purpose of expanding its capacity to increase securities market capital,stabilize the capital market,and promote the development of the capital market.At the same time,institutional investor holdings also play the role of external governors in listed companies,but whether they can exert positive governance effects has not reached a consistent conclusion,and has different opinions on the effects of insider trading.In this context,scholars have begun to explore the behavioral characteristics of institutional investors and study the governance effects of heterogeneous institutional investors,but few have studied the impact of heterogeneous institutional investors on insider trading.And in the context of China's special equity structure,will the impact of stable institutional investors on insider transactions change?In order to answer the above questions,this paper combs domestic and foreign literature related to insider trading,the nature of equity,and the heterogeneity of institutional investors.Based on the information asymmetry theory,the economic man theory,and the principal-agent theory,this article puts forward the hypothesis of this article.The data of non-financial Shanghai and Shenzhen A-share listed companies from 2014 to 2018 was selected as a sample.After screening and adjustment,4315 observations were generated.Using State14.0 analysis tools for empirical analysis,the following conclusions were drawn:First,Compared to transactional institutional investors,stable institutional investor holdings have a negative correlation with insider trading at a significant level of 5%.Second,the relationship between stable institutional investors and insider transactions is not significant in state-controlled enterprises,but it is significantly negatively correlated in non-state-controlled enterprises.Based on the conclusions,this article makes several suggestions for the supervision of insider trading behavior in listed companies.China's capital market must foster good institutional investors and encourage institutional investors to hold shares for a long time;listed companies must improve corporate governance mechanisms.Finally,the limitations in the research process are summarized,and future research directions are proposed. |
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