An Empirical Study of the Incidence of Insider Trading in China

Abstract

China has followed the international trend to regulate insider trading, but the enforcement of its insider trading regulation, as evidenced by prosecutions, is far from satisfying. In order to improve the efficacy of insider trading regulation, it is necessary first to understand the nature and extent of the underlying problem. Based on the reported insider trading cases and relevant empirical studies, including qualitative research through interviews, this paper has investigated the nature and extent of insider trading in China. It is submitted that insider trading is presently quite serious in China, exhibiting distinctive features in terms of likely insiders, types of insider trading, likely situations where insider trading occurs and so on. It is hoped that these findings will provide useful information for the future reform of China's insider trading regulation.