Disclosing and cooling-off: An analysis of insider trading rules

• 成果类型: Article
• 署名作者: Deng, Jun; Pan, Huifeng; Yan, Hongjun; Yang, Liyan
• 署名单位: University of International Business & Economics; DePaul University; University of Toronto
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103913
• 发表日期: 2024
• 关键词: Insider trading; Rule 10b5-1; Sunshine trading; disclosure; Cooling-off period

摘要

We analyze two insider-trading regulations recently introduced by the Securities and Exchange Commission: mandatory disclosure and cooling-off period. The former requires insiders disclose trading plans at adoption, while the latter mandates a delay period before trading. These policies affect investors' trading profits, risk sharing, and hence their welfare. If the insider has sufficiently large hedging needs, in contrast to the conventional wisdom from sunshine trading, disclosure reduces the welfare of all investors. In our calibration, a longer cooling-off period benefits speculators, and its implications for the insider and hedgers depend on whether the disclosure policy is already in place.