The Insider Trading Behavior Of Private Placement And Mergers

Insider trading is a common phenomenon in our country,which disturbs the normal order of market and makes the insider access to inside information the excess return of improper,which damages the majority of ordinary investors who are at the disadvantage of information.Mergers and acquisitions and private placement events have traditionally been the highlights of the CSRC's emphasis on insider trading.Mergers and acquisitions usually means a capital injection,back door listing or an industrial consolidation,but private placement mainly through non-public shares to raise funds or to buy assets.These events have a common characteristic that can have a significant impact on the future development of the company,thus contributing to a significant increase in share prices.Insider traders are using the volatility of stock prices to gain benefits from the announcement of significant events.So,is there any more serious insider trading activity that has been given to a certain type of investment,including the "private placement + mergers and acquisitions"?Based on private placement and mergers,in conjunction with the complexity of insider trading behavior,this text will take the case of Dongyuan electrical merged Hefei Guoxuan.The author will combine this transaction to analyze the game of interest between stakeholders and the behavior of insider trading.In the process of private placement and mergers,the big shareholders of Hefei Guoxuan will gain control,and acquire lucrative interests through the low price of private placement and the acquisition of assets at a high premium.The large shareholders of dongyuan electrical are at a disadvantage and have more motivation to deal with insider trading.Insider traders tend to use insider information to buy a large number of shares from the secondary market during a sensitive period,then release a variety of positive news,even"conspiring" to raise the share price of the fund and make a profit.In addition,the event study method is used to verify the existence and severity of the insider trading behavior in this process,by cumulative abnormal return after the announcement of the pre-arranged merger plan,and connecting with the daily turnover rate for insider trading behavior analysis.In this paper,it is found that the cumulative abnormal return has not been zero before the announcement of the pre-arranged merger plan,and there is a phenomenon of premature disclosure and even insider trading.In combination with the daily turnover rate,the insider traders have a large amount of selling when the cumulative abnormal return reach the highest point,so as to realize benefit maximization.Insider trading,seriously infringe on the interests of small and medium-sized investors,and regulators fail to exert their supervisory role effective.Therefore,this paper puts forward the policy Suggestions from the government regulators and the company itself.The government supervision department should optimize the information disclosure system,establish the registration system of insider information,and further improve the legal system and strengthen the post-mortem punishment.The company should improve its governance mechanism,strengthen internal self-discipline and focus on information management mechanism during major events.