Asymmetric information and inside management trading in the Chinese market |
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| Institution: | 1. Zhejiang Normal University;2. Guangdong University of Foreign Studies, China;1. School of Statistics, Capital University of Economics and Business, Beijing, China;2. School of Economics and Management, Beijing University of Technology, Beijing, China;3. Guanghua School of Management, Peking University, Beijing, China;2. University of Rome Tor Vergata, Dipartimento di Economia e Finanza, Via Columbia 2, 00133 Roma, Italy;4. Università Politecnica delle Marche, School of Business Giorgio Fuà, Money and Finance Research Group (MoFiR), Piazza Martelli 8, Ancona, Italy;1. Department of Finance and Investment, College of Economics and Administrative Sciences, Al-Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 5701, Saudi Arabia;2. LARTIGE, ASTURIMA, University of Sousse, Tunisia;3. Indian Institute of Management (IIM) Bodh Gaya, Bodh Gaya, India;4. Lebow College of Business, Drexel University, Philadelphia, USA;5. Institute of Business Research, University of Economics Ho Chi Minh, Vietnam;1. ZhongAn Online P & C Insurance Co., Ltd., 4-5F, 169 Yuanmingyuan Road, Huangpu District, Shanghai, China;2. Department of Economics and Centre for Finance, University of Gothenburg, P.O. Box 640, SE 405 30 Gothenburg, Sweden |
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| Abstract: | Insider trading incentives have been widely examined in stock markets, but mainly in developed countries. Given the fact that the volatility of stock exchange markets in emerging economies is typically even higher, there is a need for research to explore the extent to which information asymmetry plays a role in management trading incentives in emerging economies. To address this research need, this study examines management trading incentives in relation to investment efficiency in Chinese listed firms on the main board and on the small- to medium-enterprises (SME) board in the period 2006 to 2017. We find that executives buy shares when firms’ investments are more efficient. The frequency of management buying also increases with investment efficiency. However, managers do not sell their shares according to firms’ investment efficiency. Moreover, executives of firms listed on the main board trade more on the asymmetric information of investment efficiency than those on the SME board. |
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| Keywords: | Management buying and selling Trading incentives Information asymmetry Chinese listed firms |
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