Insider Trading and Innovation

Levine ROSS, Chen LIN, Lai WEI

Research output: Journal PublicationsJournal Article (refereed)peer-review

28 Citations (Scopus)


We assess whether restrictions on insider trading accelerate or slow technological innovation. Using over 80,000 industry-country-year observations across 74 economies from 1976 to 2006, we find that enforcing insider-trading laws spurs innovation—as measured by patent intensity, scope, impact, generality, and originality. Furthermore, the evidence is consistent with the view that restricting insider trading accelerates innovation by improving the valuation of, and increasing the flow of equity financing to, innovative activities.
Original languageEnglish
Pages (from-to)749-800
Number of pages52
JournalJournal of Law and Economics
Issue number4
Publication statusPublished - Nov 2017

Cite this