Insider Trading and Innovation

Levine ROSS, Chen LIN, Lai WEI

Research output: Journal PublicationsJournal Article (refereed)

2 Citations (Scopus)

Abstract

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
Volume60
Issue number4
DOIs
Publication statusPublished - Nov 2017

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equity financing
technical innovation
patent
innovation
economy
Law
industry
evidence
Innovation
Insider trading

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ROSS, Levine ; LIN, Chen ; WEI, Lai. / Insider Trading and Innovation. In: Journal of Law and Economics. 2017 ; Vol. 60, No. 4. pp. 749-800.
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Insider Trading and Innovation. / ROSS, Levine; LIN, Chen; WEI, Lai.

In: Journal of Law and Economics, Vol. 60, No. 4, 11.2017, p. 749-800.

Research output: Journal PublicationsJournal Article (refereed)

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AB - 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.

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