Corporate governance and insider trading: evidence from Malaysia
The collapse of prominent companies coupled with the increasing number of lawsuits against the directors of the companies for wrongdoing has raised concerns with insider trading activities. Insider trading does cause significant market reaction, whereby the insiders are able to earn significant cu...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Academic Research Publishing Group
2018
|
| Subjects: | |
| Online Access: | http://irep.iium.edu.my/69483/ http://irep.iium.edu.my/69483/1/69483_Corporate%20governance%20and%20insider%20trading_article.pdf |
| _version_ | 1848787123572834304 |
|---|---|
| author | Ahmad Kamal, Siti Aisyah Hasnan, Suhaily Mohd Nasarudin, Ahmad Fawwaz |
| author_facet | Ahmad Kamal, Siti Aisyah Hasnan, Suhaily Mohd Nasarudin, Ahmad Fawwaz |
| author_sort | Ahmad Kamal, Siti Aisyah |
| building | IIUM Repository |
| collection | Online Access |
| description | The collapse of prominent companies coupled with the increasing number of lawsuits against the directors of the
companies for wrongdoing has raised concerns with insider trading activities. Insider trading does cause significant
market reaction, whereby the insiders are able to earn significant cumulative abnormal returns for both purchases
and sales. However, studies on the factors influencing insider trading are relatively scarce. This study aims to
examine the factors that influence insider trading activities. Specifically, this study examines the relationship
between four corporate governance factors, namely, board independence, board size, executive compensation and
ownership concentration and insider trading activities in public listed companies in Malaysia. This study evinces that
board size and executive compensation significantly influence insider purchases. On the other hand, significant
market reaction caused by insider sales may be explained by other factors. Therefore, future studies could be carried
out on other factors that may influence opportunistic insider sales. This study also found evidence against the semistrong
form Efficient Market Hypothesis theory that suggests insiders cannot earn abnormal returns in a semi-strong
efficient market using public information |
| first_indexed | 2025-11-14T17:19:56Z |
| format | Article |
| id | iium-69483 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T17:19:56Z |
| publishDate | 2018 |
| publisher | Academic Research Publishing Group |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | iium-694832019-02-15T07:49:49Z http://irep.iium.edu.my/69483/ Corporate governance and insider trading: evidence from Malaysia Ahmad Kamal, Siti Aisyah Hasnan, Suhaily Mohd Nasarudin, Ahmad Fawwaz HG4501 Stocks, investment, speculation The collapse of prominent companies coupled with the increasing number of lawsuits against the directors of the companies for wrongdoing has raised concerns with insider trading activities. Insider trading does cause significant market reaction, whereby the insiders are able to earn significant cumulative abnormal returns for both purchases and sales. However, studies on the factors influencing insider trading are relatively scarce. This study aims to examine the factors that influence insider trading activities. Specifically, this study examines the relationship between four corporate governance factors, namely, board independence, board size, executive compensation and ownership concentration and insider trading activities in public listed companies in Malaysia. This study evinces that board size and executive compensation significantly influence insider purchases. On the other hand, significant market reaction caused by insider sales may be explained by other factors. Therefore, future studies could be carried out on other factors that may influence opportunistic insider sales. This study also found evidence against the semistrong form Efficient Market Hypothesis theory that suggests insiders cannot earn abnormal returns in a semi-strong efficient market using public information Academic Research Publishing Group 2018 Article PeerReviewed application/pdf en http://irep.iium.edu.my/69483/1/69483_Corporate%20governance%20and%20insider%20trading_article.pdf Ahmad Kamal, Siti Aisyah and Hasnan, Suhaily and Mohd Nasarudin, Ahmad Fawwaz (2018) Corporate governance and insider trading: evidence from Malaysia. Journal of Social Sciences Research, Special Issue 2. pp. 31-39. ISSN 2413-6670 E-ISSN 2411-9458 https://arpgweb.com/journal/7/special_issue/11-2018/2/4 |
| spellingShingle | HG4501 Stocks, investment, speculation Ahmad Kamal, Siti Aisyah Hasnan, Suhaily Mohd Nasarudin, Ahmad Fawwaz Corporate governance and insider trading: evidence from Malaysia |
| title | Corporate governance and insider trading: evidence from Malaysia |
| title_full | Corporate governance and insider trading: evidence from Malaysia |
| title_fullStr | Corporate governance and insider trading: evidence from Malaysia |
| title_full_unstemmed | Corporate governance and insider trading: evidence from Malaysia |
| title_short | Corporate governance and insider trading: evidence from Malaysia |
| title_sort | corporate governance and insider trading: evidence from malaysia |
| topic | HG4501 Stocks, investment, speculation |
| url | http://irep.iium.edu.my/69483/ http://irep.iium.edu.my/69483/ http://irep.iium.edu.my/69483/1/69483_Corporate%20governance%20and%20insider%20trading_article.pdf |