Insider Trading, Option Exercises and Private Benefits of Control

We investigate patterns of abnormal stock performance around insider trades and option exercises on the Dutch market. Listed firms in the Netherlands have a long tradition of employing many anti-shareholder mechanisms limiting shareholders rights. Our results imply that insider transactions are more profitable at firms where shareholder rights are not restricted by antishareholder mechanisms. This finding goes against the monitoring hypothesis which states that more shareholder orientation and stronger blockholders would reduce the gains from insider trading. We show robust support for the sub... Mehr ...

Verfasser: Cziraki, Peter
de Goeij, Peter
Renneboog, Luc
Dokumenttyp: doc-type:workingPaper
Erscheinungsdatum: 2010
Verlag/Hrsg.: Budapest: Hungarian Academy of Sciences
Institute of Economics
Schlagwörter: ddc:330 / G14 / G34 / M52 / insider trading / management stock options / timing by insiders / corporate governance / antishareholder mechanisms / anti-takeover mechanisms / Insiderhandel / Aktienoption / Shareholder Value / Niederlande
Sprache: Englisch
Permalink: https://search.fid-benelux.de/Record/base-29231164
Datenquelle: BASE; Originalkatalog
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Link(s) : http://hdl.handle.net/10419/108177

We investigate patterns of abnormal stock performance around insider trades and option exercises on the Dutch market. Listed firms in the Netherlands have a long tradition of employing many anti-shareholder mechanisms limiting shareholders rights. Our results imply that insider transactions are more profitable at firms where shareholder rights are not restricted by antishareholder mechanisms. This finding goes against the monitoring hypothesis which states that more shareholder orientation and stronger blockholders would reduce the gains from insider trading. We show robust support for the substitution hypothesis as insiders of firms which effectively curtail shareholder rights enjoy valuable private benefits of control in lieu of engaging in insider trading to exploit their position.