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Insider Trading week 1 (no more than 250 words 2 references))

 

Your research should provide a measure of information about the topic’s significance to the current business climate. At least two reference sources should be used to support a substantive and detailed response. Make sure to give credit to your sources, though formal citations are not required. Please be thorough and respectful on the discussion board. Check your grammar, punctuation, and spelling before posting.

Reference sources must be limited to the Wall Street Journal, Financial Times, New York Times, Barron’s, Investors’ Business Daily, The Economist, or an academic journal article from a respected accounting or finance journal.

 

 

Augustin, P., Brenner, M., & Subrahmanyam, M. G. (2019). Informed Options Trading Prior to Takeover Announcements: Insider Trading?  Management Science,  65(12), 5697–5720. https://doi.org/10.1287/mnsc.2018.3122

 

White, R. M. (2020). Insider Trading: What Really Protects U.S. Investors?  Journal of Financial & Quantitative Analysis,  55(4), 1305–1332. https://doi-org.ezproxy1.apus.edu/10.1017/S0022109019000292

 

Insider Trading and Its Significance in Today’s Business Climate

Insider trading refers to the buying or selling of a publicly traded company’s stock by individuals with access to non-public, material information. Despite regulatory safeguards, insider trading remains a significant concern in financial markets because it undermines investor confidence, distorts market efficiency, and can create unfair advantages for those with privileged knowledge (White, 2020). The practice can occur both legally, through pre-disclosed corporate transactions, and illegally, when individuals exploit confidential information for personal gain.

Recent research demonstrates that insider trading continues to influence stock prices and market behavior. Augustin, Brenner, and Subrahmanyam (2019) found evidence that informed trading occurs in options markets prior to corporate takeover announcements, suggesting that even sophisticated investors can exploit non-public information for profit. Such activity can erode trust in capital markets and highlight gaps in regulatory enforcement.

The significance of insider trading in today’s business climate is heightened by the increasing speed and accessibility of trading platforms, as well as complex financial instruments. Regulatory bodies, such as the SEC, play a critical role in monitoring and enforcing rules to protect ordinary investors, yet studies show ongoing challenges in completely mitigating risk (White, 2020). For corporations and investors alike, understanding the legal and ethical boundaries of insider trading is essential to maintain fairness, transparency, and market integrity.

References

Augustin, P., Brenner, M., & Subrahmanyam, M. G. (2019). Informed options trading prior to takeover announcements: Insider trading? Management Science, 65(12), 5697–5720. https://doi.org/10.1287/mnsc.2018.3122

White, R. M. (2020). Insider trading: What really protects U.S. investors? Journal of Financial & Quantitative Analysis, 55(4), 1305–1332. https://doi-org.ezproxy1.apus.edu/10.1017/S0022109019000292

 

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