Substitutes for insider trading

Trading upon not released, insider, details are an illegal activity. Trading in shares that may be presumed to perform in a similar fashion based on the same information is legal, and possibly profitable. The aim of this dissertation is to examine if substitutes to listed shares are present on the Stockholm Stock Exchange, and whether or not they offer a similar return when plagued by releases of insider information. We make use of an event study methodology and examine the return of the share that releases insider information to the stock market, to that of its substitute. Over a time period of 5 years, substitutes show a return indicating that it’s lucrative for insiders to trade in these securities using insider information acquired from an identical organization…

Contents: Substitutes for insider trading

1. Introduction
2. Insider, Inside Information & Insider Trading
2.1. Insider
2.2. Inside Information
2.3. Insider Trading
3. Previous Research
3.1. Insider Trading
3.2. Substitute Trading
4. Hypothesis
5. Method
5.1. Event Studies
5.1.1. Event Window Length
5.1.2. Market Model
5.1.3. Cumulative Abnormal Returns
6. Data Sources & Data Gathering Procedures
6.1.1. Time Period
6.1.2. Corporation/Stock Selection Criteria
6.1.3. Substitute Company Profiles
6.2. Included Information
6.2.1. Press Releases
6.2.2. Quarterly Reports
6.2.3. Source Of Financial Data
6.2.4. Programs For Analyzing The Stock Data
7. Results And Analysis
7.1. Hypothesis 1
7.2. Hypothesis 2
8. Conclusions..

Source: Stockholm School of Economics

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