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What Explains Insider Trading Restrictions? International Evidence On The Political Economy Of Insider Trading Regulation, Laura N. Beny
Law & Economics Working Papers Archive: 2003-2009
This article investigates the determinants of insider trading regulation across countries. The article presents a political economy analysis of such regulation that takes into account both private (distributional) and public (economic efficiency) considerations. The model cannot be tested directly because the relevant private preferences and social costs are unobservable. However, existing theories of capital market development suggest that various observable social factors can explain the diversity of insider trading policies across countries. In turn, these social factors should reveal the underlying preferences and social costs motivating such regulation.
The main finding, based on data from a cross section of countries …