Abstract
We use the largest cross-country sample of reported share transactions by corporate insiders to date to establish that, generally, insiders in Europe, and particularly in continental Europe, do not make significant abnormal trading profits. The result holds across subsamples of firms with different characteristics. We explain the lack of profitability with the specific information environment of closely-held corporations prevalent in many European countries. Furthermore, we find that introduction of the Market Abuse Directive (MAD) had a mixed impact on frequency and volume of insider trading across countries but had no significant impact on profits of insider-mimicking portfolios. We also find that insiders’ buy (sale) trades generate higher (lower) profits in countries in which the MAD is more strictly enforced.
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