Research On The Influence Of Pay Gap Of Chinese Listed Companies On Insider Trading

The new "Company Law" in 2006 clearly stipulates that if the directors,supervisors and senior management of a listed company own the company’s stock,the relevant stock trading share shall not exceed 25%of the total shares held by them during their term of office.The law on executive stock trading practices opens the door to insider trading.Since then,insider trading in listed companies has become more and more frequent.Over the years,the China Securities Regulatory Commission has successively made detailed regulations on the trading hours,trading methods and trading disclosures of listed company executives for their own company’s stock trading,which to a certain extent has regulated the behavior of listed company executives’trading.Compared with external investors,the insiders of listed companies have the natural advantages given by their positions,which help them easily obtain the internal information of the listed company.In addition,they are familiar with the company’s development strategy planning and performance level,and can make accurate judgement about the stock price.The timing ofj udgement is to buy low and sell high,to obtain excess returns.This kind of behavior has caused a great impact on the transaction fairness of small and medium investors.Therefore,relevant departments must strictly supervise insider trading to reduce the loss of interests of small and medium investors and better maintain the principle of "three fairs" in the capital market.Under the background of my country’s current economic system,although China’s relevant regulatory authorities have established relatively complete legal norms on insider trading,can insiders of listed companies use their information advantages to conduct insider trading?What factors influence the possibility of insider trading?In particular,what effect do pay gap and internal control quality play on the occurrence of insider trading behavior?These issues are important and controversial,and thus become the focus of this thesis.Based on the above background,this thesis takes the insider trading data from 2015 to 2019 of A-share listed companies in Shanghai and Shenzhen stock exchanges as samples,conducts an empirical study and finds that the pay gap is positively correlated with the possibility of insider trading,which means the larger the pay gap is,the greater the possibility of insider trading.At the same time,after adding the adjustment variable internal control quality,it is found that:in companies with low internal control quality,the positive effect of pay gap on the possibility of insider trading can be strengthened;in companies with high internal control quality,it can be the positive effect of inhibiting the pay gap on the possibility of insider trading.Finally,it is found that the effects of the pay gap on insider trading are also significantly different under different property rights.Through the above research,it is possible to better study how the pay gap affects the behavior of insider trading,and at the same time pay attention to the moderating effect of the quality of the company’s internal control and the nature of property rights on the relationship between the two,so as to provide a certain reference for related research.