Insider Trading and Corporate Governance in the Banking Sector. New Lessons on the Entrenchment Effect

Esther B. del Brio, Javier Perote, Alberto de Miguel, Gerardo Gómez

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

3 Scopus citations

Abstract

This paper uses panel data estimation under the assumptions of the agency theory of insider trading to identify the factors enhancing bank insider trading. We conclude that the more entrenched the directors, the less prestigious the bank, the bigger the firm and the lower the charter values for high levels of ownership, the higher the intensity of insider trading activity. Thus, the emerging picture is of a scenario where insider trading activity is triggered by the absence of efficient control mechanisms, either external (regulators control the level of bank capitalization but it is not easy for them to also control other opportunistic behaviors) or internal (shareholders fail to control managers when managers’ stakes are very low or very high).

Original languageEnglish
Title of host publicationCSR, Sustainability, Ethics and Governance
PublisherSpringer Nature
Pages219-233
Number of pages15
DOIs
StatePublished - 2018
Externally publishedYes

Publication series

NameCSR, Sustainability, Ethics and Governance
ISSN (Print)2196-7075
ISSN (Electronic)2196-7083

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