The Regulation of Insider Trading as an Agency Problem | Zendy

Alexandre Padilla | Zendy

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The Regulation of Insider Trading as an Agency Problem

Author(s) -

Alexandre Padilla

Publication year - 2004

Publication title -

ssrn electronic journal

Language(s) - English

Resource type - Journals

ISSN - 1556-5068

DOI - 10.2139/ssrn.632842

Subject(s) - insider trading , agency (philosophy) , business , insider , accounting , law and economics , economics , finance , political science , law , sociology , social science

It has been argued that insider trading can be a source of agency problems and, hence, should be prohibited. This paper attempts to assess whether, by prohibiting insider trading, regulation can reduce agency problems. First, it will be shown that regulation has been unable to prevent insider trading. Second, we will explain why the regulation of insider trading cannot be effective. Finally, we will demonstrate that, regarding the reduction of agency problems, it cannot but produce the opposite effect.

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