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The effect of cross-listing on insider trading returns

Journal Article


Abstract


  • Holding privileged positions within firms, insiders can acquire excessive private benefits based on their informational advantage. The bonding hypothesis suggests that this can be prevented when a firm is cross-listed on an exchange with higher regulatory and legal costs compared with its home exchange. When cross-listed insiders buy and sell shares, the returns earned are lower than in domestic firms. This difference is attributable to the increased shareholder protection in cross-listed firms that constrains the extraction of private benefits, such that when cross-listed insiders trade, they trade for non-informational reasons. © 2011 The Authors. Accounting and Finance © 2011 AFAANZ.

Publication Date


  • 2012

Citation


  • Chang, M. & Corbitt, R. (2012). The effect of cross-listing on insider trading returns. Accounting and Finance, 52 (3), 723-741.

Scopus Eid


  • 2-s2.0-84866022746

Number Of Pages


  • 18

Start Page


  • 723

End Page


  • 741

Volume


  • 52

Issue


  • 3

Place Of Publication


  • Australia

Abstract


  • Holding privileged positions within firms, insiders can acquire excessive private benefits based on their informational advantage. The bonding hypothesis suggests that this can be prevented when a firm is cross-listed on an exchange with higher regulatory and legal costs compared with its home exchange. When cross-listed insiders buy and sell shares, the returns earned are lower than in domestic firms. This difference is attributable to the increased shareholder protection in cross-listed firms that constrains the extraction of private benefits, such that when cross-listed insiders trade, they trade for non-informational reasons. © 2011 The Authors. Accounting and Finance © 2011 AFAANZ.

Publication Date


  • 2012

Citation


  • Chang, M. & Corbitt, R. (2012). The effect of cross-listing on insider trading returns. Accounting and Finance, 52 (3), 723-741.

Scopus Eid


  • 2-s2.0-84866022746

Number Of Pages


  • 18

Start Page


  • 723

End Page


  • 741

Volume


  • 52

Issue


  • 3

Place Of Publication


  • Australia