Market Abuse Directive and Insider Trading: Evidence from Italian Tender Offers

Ferretti, Riccardo ; Pattitoni, Pierpaolo ; Patuelli, Roberto (2016) Market Abuse Directive and Insider Trading: Evidence from Italian Tender Offers. Bologna: Dipartimento di Scienze economiche DSE, p. 43. DOI 10.6092/unibo/amsacta/5175. In: Quaderni - Working Paper DSE (1071). ISSN 2282-6483.
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Abstract

This study analyzes the effectiveness of the Market Abuse Directive (MAD) in reducing possible profits from insider trading during voluntary tender offers with the purpose of delisting initiated by controlling shareholders. Exploiting the quasi-experimental setting provided by the introduction of the MAD, our event-study analysis on the Italian market suggests that the new regulation did not produce appreciable effects on the magnitude of abnormal returns and volumes noted before the announcement of a tender offer. Multivariate econometric analyses based on regression and matching methods confirm this result. However, poolability tests reveal that the MAD has changed the manner in which corporate characteristics influence the capacity of insiders to make profit. We interpret our results considering the choice problem of the optimal amount of insider trading, when comparing the marginal costs and benefits of the illegal activity.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Ferretti, Riccardo
Pattitoni, Pierpaolo
Patuelli, Roberto0000-0003-1908-4307
Keywords
Market Abuse Directive, Tender offer, Delisting, Event study
Subjects
ISSN
2282-6483
DOI
Deposit date
08 Jun 2016 14:30
Last modified
08 May 2017 13:18
URI

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