Applying developed-country regulation in emerging markets

Pornanong Budsaratragoon, David Hillier, Suntharee Lhaopadchan

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This paper undertakes an out-of-sample test of developed-country insider trading regulation in an emerging market environment (Thailand), where severe information asymmetry, lax enforcement and poor pricing efficiency are endemic. Thai insider trading regulation, which mimics developed market rules, fails on all three measures of success. Insiders trade with impunity during a regulated trading ban. Their trading performance outperforms other investors at all times, and they continue to exploit their privileged position with respect to information flow. Our study suggests it is inappropriate for emerging market regulators to adopt developed market regulation without first considering the unique characteristics of their own environment.

Original languageEnglish
Pages (from-to)1013-1039
Number of pages27
JournalAccounting and Finance
Volume52
Issue number4
Early online date30 Jan 2012
DOIs
Publication statusPublished - Dec 2012

Keywords

  • regulation
  • insider trading
  • emerging markets
  • Thailand
  • earnings

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