{"title":"Capital market opening and insider trading profitability: Empirical evidence in the context of ‘Mainland China–Hong Kong Stock Connect’","authors":"Chunyang Lu, Xingquan Yang","doi":"10.1016/j.asieco.2024.101768","DOIUrl":null,"url":null,"abstract":"<div><p>This study uses a multi-period DID (difference-in-difference) model and data from Chinese A-share listed companies from 2009 to 2019 to analyse the relationship between capital market opening and insider trading profitability. We find that capital market opening can significantly inhibit insider trading profitability. This relationship remains substantially unchanged after a series of robustness tests. Enhancing stock pricing efficiency and corporate governance are two plausible mechanisms through which capital market opening reduces insider trading profitability. A cross-sectional analysis finds that the mitigating role of the capital market opening is more pronounced in bull stock markets, and in firms with higher price sensitivity and investor attention. Overall, these results enrich the literature on capital market opening and provide new insights into its effects on emerging markets.</p></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":null,"pages":null},"PeriodicalIF":2.9000,"publicationDate":"2024-06-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Asian Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1049007824000630","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
This study uses a multi-period DID (difference-in-difference) model and data from Chinese A-share listed companies from 2009 to 2019 to analyse the relationship between capital market opening and insider trading profitability. We find that capital market opening can significantly inhibit insider trading profitability. This relationship remains substantially unchanged after a series of robustness tests. Enhancing stock pricing efficiency and corporate governance are two plausible mechanisms through which capital market opening reduces insider trading profitability. A cross-sectional analysis finds that the mitigating role of the capital market opening is more pronounced in bull stock markets, and in firms with higher price sensitivity and investor attention. Overall, these results enrich the literature on capital market opening and provide new insights into its effects on emerging markets.
期刊介绍：
The Journal of Asian Economics provides a forum for publication of increasingly growing research in Asian economic studies and a unique forum for continental Asian economic studies with focus on (i) special studies in adaptive innovation paradigms in Asian economic regimes, (ii) studies relative to unique dimensions of Asian economic development paradigm, as they are investigated by researchers, (iii) comparative studies of development paradigms in other developing continents, Latin America and Africa, (iv) the emerging new pattern of comparative advantages between Asian countries and the United States and North America.
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