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Title:Insider trading in Germany: Do corporate insiders exploit inside information? PDF Logo
Authors:Dymke, Björn M.
Walter, Andreas
Issue Date:2006
Series/Report no.:Tübinger Diskussionsbeitrag 309
Abstract:Our study analyzes a large sample of transactions carried out by corporate insiders reported to the German regulatory authority BaFin in the period July 1, 2002 to April 30, 2005 employing event study methodology. In particular, we focus on the question whether corporate insiders exploit inside information while trading in their company's stock. Therefore we use a distinct property of German law, i.e. company's obligation to reveal inside information through ad-hoc news disclosures, to link trading of insiders to their foreknowledge of important corporate news. We find strong evidence that insiders exploit inside information as they earn above average profits by front-running on subsequent news disclosures. Furthermore, looking at the type of insider, we find that members of the supervisory board (directors) and the group of other insiders (basically family members of senior managers and directors) profit substantially from exploiting inside information. In contrast, members of the executive board (senior managers) can be largely exculpated from exploiting inside information as they realize below average returns with their rare front-running transactions.
Subjects:insider trading
inside information
§15a WpHG
German stock market
regulation of financial markets
JEL:G11
G14
G30
Persistent Identifier of the first edition:urn:nbn:de:bsz:21-opus-27380
Document Type:Working Paper
Appears in Collections:Tübinger Diskussionsbeiträge, Universität Tübingen

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