An Ethical Analysis of Regulating Insider Trading | Land Portal

Resource information

Date of publication: 
June 2006
Resource Language: 
ISBN / Resource ID: 
NARCIS:uu:oai:dspace.library.uu.nl:1874/309522
Copyright details: 
Open Access, this refers to access without restrictions, and without financial incentives. Access to the resource is gained directly, without any obstacles. From info:eu-repo/semantics/openAccess

Although there seems to be a broad consensus to prohibit insider trading among supervising authorities and market professionals, the debate on insider trading has not settled definitively. We introduce a distinction between insider trading and market manipulation on the one hand and corporate insiders versus misappropriators on the other hand. This gives rise to four types of alleged wrong transactions. Using a utilitarian and a non-utilitarian fairness approach, we demonstrate that it is hard to find good arguments against insider trading in its purest form (type I transactions). Using a property rights perspective in particular, we show that neither a general ban nor a general permitting of insider trading is an efficient outcome. We propose a solution in which companies solve this compensation problem contractually with their corporate agents. In this way,insider trading can be used as a governance instrument which can reinforce the fiduciary relationship.

Authors and Publishers

Author(s), editor(s), contributor(s): 

Engelen, P. J.
Liedekerke, L.

Data provider

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