University of Oulu

Profitability of insider trading in Finnish stock market

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Author: Khan, Muhammad1
Organizations: 1University of Oulu, Oulu Business School, Department of Finance, Finance
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 0.7 MB)
Pages: 60
Persistent link: http://urn.fi/URN:NBN:fi:oulu-201906202591
Language: English
Published: Oulu : M. Khan, 2019
Publish Date: 2019-06-20
Thesis type: Master's thesis
Tutor: Kallunki, Juha-Pekka
Reviewer: Kallunki, Juha-Pekka
Sahlström, Petri
Description:

Abstract

The insider trading is one of the controversial phenomena in the financial world. The aims of the study is to analysis the profitability of insider trading in Finland, also to investigate the association of insider determinants with abnormal returns for purchase and sales transactions. The motivation for this study is the lack of research related to insider trading on Finnish stocks. The main parts of insider trading purchase and sales transactions are investigated and analysis, that insider purchases and sales transactions are related to abnormal returns. In addition, the insider determinants (insider position, firm size, transaction size, book to market ratio, and price to earnings ratio) are also analysed and investigated the roles of it with insider profitability. In order to fulfil the objectives, the daily insider transactions data of 135 publicly listed companies in the Finnish stock market was investigated from 01-07-2005 to 31-12-2014.

The study applied the market adjusted (stocks) returns model, along with univariate, correlation analysis and linear regression to determine the relation of insider traders and abnormal returns. Interestingly, the results found no such relationship of insider trading and abnormal returns. Insiders of high book to market firms are the only who are gaining extra profits (abnormal returns). The overall concluding remarks for this study is, in Finland the insider traders are not generating abnormal returns for both purchases and sales transactions.

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Copyright information: © Muhammad Khan, 2019. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.