Work

Insider trading footprints: An empirical look at detected cases in Australia

Year: 2025

Type: article

Abstract: This paper examines illegal insider trading in Australian equity markets, focusing on whether such trades leave observable footprints in prices and returns. We compile a hand‐collected dataset of identified insider‐trading incidents. Using an event‐study design, we find minimal footprints for earnings announcements and a small negative price effect for M&A deals. A detection‐controlled estimation (DCE) model reveals that while 17.79% of M&A announcements likely involve insider trading, regulators detect only 29.59%. Thus, relying solely on detected trades understates insider trading's broader impact. Our results highlight stealthy trading tactics and the need for enhanced surveillance to combat hidden illegal trades.

Source: International Review of Finance

DOI: 10.1111/irfi.70013

Authors: Dean Katselas, Sarah Osborne

Institutions: Australian National University, Queensland University of Technology

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $2,900