Insider Trading, Option Exercises and Private Benefits of Control

Arbeitspapier

We investigate patterns of abnormal stock performance around insider trades and option exercises on the Dutch market. Listed firms in the Netherlands have a long tradition of employing many anti-shareholder mechanisms limiting shareholders rights. Our results imply that insider transactions are more profitable at firms where shareholder rights are not restricted by antishareholder mechanisms. This finding goes against the monitoring hypothesis which states that more shareholder orientation and stronger blockholders would reduce the gains from insider trading. We show robust support for the substitution hypothesis as insiders of firms which effectively curtail shareholder rights enjoy valuable private benefits of control in lieu of engaging in insider trading to exploit their position.

Object Details

• ISBN: 978-963-9796-93-5
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IEHAS Discussion Papers ; No. MT-DP - 2010/6

Classification and Topics

• Classification: Wirtschaft ; Information and Market Efficiency; Event Studies; Insider Trading ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Personnel Economics: Compensation and Compensation Methods and Their Effects
• Subject: insider trading ; management stock options ; timing by insiders ; corporate governance ; antishareholder mechanisms ; anti-takeover mechanisms ; Insiderhandel ; Aktienoption ; Corporate Governance ; Shareholder Value ; Niederlande

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cziraki, Peter ; de Goeij, Peter ; Renneboog, Luc
• Event: Veröffentlichung
• (who): Hungarian Academy of Sciences, Institute of Economics
• (where): Budapest
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/108177
• Last update: 10.03.2025, 11:42 AM CET