Abstract
This paper analyzes the impact of both penal law and prosecution of insider trading on the informational efficiency of securities markets. We show that increasing the severity of penalties to insider trading as well as making insider prosecution more efficient might improve the price discovery process in securities markets. Put differently, banning insider trading from the securities markets by stricter penal laws and/or a more efficient prosecution does not harm the informational efficiency of securities markets in general. If beneficial, we show that regulators of securities markets should opt for developing the stronger leg of insider regulation in order to improve the informational efficiency of the securities market the most. We illustrate that the findings apply to a broad range of securities markets under asymmetric information.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
