The Effects of Insider Trading on the Stock Price Volatility in an Emerging Market Setting伊斯坦布尔.pdf

Müslümov, A. (2008) The Effects of Insider Trading on the Stock Price Volatility ın an Emerging Market Setting: Evidence from Istanbul Stock Exchange, in Corporate Governance and Corporate Social Responsibility eds. Crowther, D. and G. Aras, 59-68. The Impact of Insider Trading on the Stock Price Volatility 59 Chapter 4 The Impact of Insider Trading on the Stock Price Volatility in an Emerging Market Setting: Evidence from Istanbul * Stock Exchange Alovsat Muslumov Abstract This study examines stock price volatility effects of the insiders trading in Istanbul Stock Exchange. Our results indicate that insider trading significantly affects stock price volatility during and after the trade. Sub -sample analyses show that sell positions, the trades of the traders more related with the company, larger trades, trades in the smaller stocks, and trades that follow contrarian pattern causes in the more volatility after the trade period. These results indicate that insider trading destabilizes the market. Introduction Insider trading is defined as trades of the individuals using publicly unavailable privileged information set. The debate about the merits of insider trading centers around the economic efficiency and morality dimensions. Insider trading is strictly conceived morally wrong and often persecuted as legally forbidden, since the usage of privileged information to gain profits causes in the loss of investors’ 1 confidence to markets and leads to t