Identification Of Insider Trading In Mergers And Acquisitions

China stock market has gone through24years till2014. During these years, China stock market has achieved a remarkable development and our legal system has been gradually improved. With a sustainable growing national economy, China stock market has become more and more active with each passing day.Merger and acquisition (M&A) is one of the two ways of business growth, compared to development through internal accumulation, M&A is more advantageous in terms of both economic cost and time cost. Accompanying with the marketization and internationalization of China’s economic, as well as the maturity of capital market, M&A events are surging recently. M&A is of great significance in terms of micro-economy such as strengthening the industry concentration, improving enterprise’s core competitiveness, realizing diversification as well as promoting innovation and industrial upgrading. However, with M&A of listed companies, the insider trading comes as follow.The management always pays great attention to insider trading, especially insider trading within M&A behaviors. A series of laws, rules and policies have been put forward to execute severe supervision on insider trading. Insider trading will not only seriously hinder the normal order of security market, but will also bring harm to the benefits of investors. Our samples are based on the35insider trading cases published by China Securities Regulatory Commission until December2013. We study the statistical characteristics, price behavior, and microstructure of these insider trading cases. The research is significant to help regulatory authorities set up monitoring system and help investors avoid stocks with high information risk.Reference to the research results of insider trading behavior of outstanding scholars at home and abroad, in this study, we make the Chinese stock market as research object, make empirical research of information asymmetry. Using the "five-step" method to measure the characteristics of yield rate, liquidity of stock market, and introduce a new indicator:the cumulative abnormal returns ratio, through that to identify the insider trading behavior, then within the "five-step" method, in order to testify this method identifying the insider trading or not, and put forward policy recommendations to prevent insider trading.In chapter1,we introduce the background, significance, contents, main methods of the research and the innovation points in this paper.In chapter2, we introduce the related theory as well as the literature review. Firstly, introduce related connotation of insider trading, and then to review and analysis foreign and domestic theory of insider trading. We can conclude that although within the scope of a certain extent insider trading behavior has some positive significance, but in the long run, serious insider trading behavior is not conducive to the development of the stock market.In chapter3, we introduce institutional context, by organizing the insider trading laws and regulations. Through the analysis of China’s relevant laws and regulations and departmental rules and regulations of insider trading, which highlight the Chinese government’s determination to crack down on insider trading. It is the foundation for concluding with policy recommendations.In chapter4, we introduce the empirical test method and the selection of sample data. For research of insider trading caused, selecting35 companies which experienced asset merger and acquisition and also be punished or judge by the CSRC and judicial system according to the relevant laws and regulations of insider trading from2004to2013. Analyse whether insider trading will generate excess returns, as well as the change of volatility and liquidity of stock market that caused by insider trading.In chapter5, we analysis the results of the empirical test, it can be concluded that insider trading behavior does exist in Chinese stock market. Through empirical test, we can conclude some common on features of stock market when insider trading exists, so as to provide theoretical basis for the regulate of insider trading behavior and then put forward relevant countermeasures and suggestions.