Artikel

Insider Trading and Fraudulent Share Repurchase

Share repurchase conveys information to investors and influences stock price in capital market. Normally when a company announces share buyback, the company's stock price will rise immediately. Thus, some insiders may take advantage of this pattern and create a fake repurchase event. When the stock price rises due to the announcement, the insiders can sell their shares at a higher price, which is insider trading of fraudulent share repurchase. We study short-term reactions around the repurchase event, using a sample of 2,272 repurchase firms in the Chinese stock market from 2013 to 2019. The main finding is that insider trading around the repurchase event is prevalent and insider trading of fraudulent repurchase is most serious. We also find that companies with more serious agency problem and poorer corporate governance are more likely to engage in fraudulent repurchase, and that companies with lower EPS and ROA, larger firm size and higher leverage are more prone to have fraudulent repurchase event. This paper can provide practical guidance in differentiating the normal repurchase from the fraudulent repurchase.

Sprache
Englisch

Erschienen in
Journal: Credit and Capital Markets – Kredit und Kapital ; ISSN: 2199-1235 ; Volume: 55 ; Year: 2022 ; Issue: 2 ; Pages: 227-260

Klassifikation
Wirtschaft
Information and Market Efficiency; Event Studies; Insider Trading
Corporate Finance and Governance: General
Thema
Fraudulent Share Repurchase
Insider Trading
Signal Theory
Agency Problem
Corporate Governance

Ereignis
Geistige Schöpfung
(wer)
Wang, Du
Li, Xiang
Tang, Hui
Sun, Yicheng
Ereignis
Veröffentlichung
(wer)
Duncker & Humblot
(wo)
Berlin
(wann)
2022

DOI
doi:10.3790/ccm.55.2.227
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Artikel

Beteiligte

  • Wang, Du
  • Li, Xiang
  • Tang, Hui
  • Sun, Yicheng
  • Duncker & Humblot

Entstanden

  • 2022

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