Evidence of insider trading in the New Zealand stock market prior to major corporate announcements

Abstract

These studies present evidence which suggests that insiders on average make abnormal profits from trading in their firms' securities and that their transactions are based on a knowledge of nonpublic information. The majority of these studies have tested the trading of identifiable corporate insiders by directly examining 'declared insider trades', thus providing relatively strong tests of insider trading (for example, see Seyhun (1986)). Several studies have, on the other hand, conducted indirect tests of insider trading by examining price and volume trends during the periods immediately preceding public disclosure of corporate events (for example, see Keown and Pinkerton (1981).