Year: 2025
Type: article
Abstract: How insider trading affects market efficiency and whether it should be regulated has long been controversial. Nowadays, it is widely recognised that insider trading is a harmful activity in capital markets and should be prohibited. However, proponents of insider trading argue that it should not always be viewed as a destabilising, illegal and harmful market practice. This paper attempts to organise their views and evaluate the arguments of the proponents on three levels: legislation legitimacy, corporate governance and market efficiency. Based on a critical analysis of these arguments, the paper states that regulating insider dealing therefore becomes a legal imperative, aiming to ensure the proper functioning of markets, safeguard them from illegal practices, and maintain investor confidence in the premise that the markets offer a fair trading environment in a context of informational equality and transparency.
Author: Xinyuan Fang
Institution: Wuhan University
Language: English
Subfield: Marketing
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4415075080
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