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The Sarbanes‐Oxley act and informed trading in the options market: Evidence from share repurchase announcements
Author(s) -
Badshah Ihsan,
Koerniadi Hardjo,
Kolari James
Publication year - 2021
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/irfi.12281
Subject(s) - business , volatility (finance) , alternative trading system , accounting , sarbanes–oxley act , monetary economics , financial economics , algorithmic trading , economics , finance , audit
This study examines the informed options trading hypothesis before and after the implementation of the Sarbanes‐Oxley Act (SOX). We find that informed option trading, as measured by implied volatility spreads, occurs only in the period before the enactment of this Act but disappears thereafter. Our results suggest that the SOX had a significant impact on informed trading in U.S. option markets.