Abstract
In this paper, we examine the impact of major regulatory changes in New Zealand on the profitability and informational basis of insider transactions. Legislation around the world appears to have tried to encourage insiders to trade only in specified instances. We examine the efficacy of this approach. We conclude that the law changes have had a negative impact on the profitability of insider trading and appear to have forced insiders to stop trading on the knowledge of upcoming price-sensitive events. The results show that well constructed insider-trading laws could be effective in minimising the most harmful aspects of insider trading.
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