Insider Trading, Information Asymmetry, and Corporate Governance

บทคัดย่อ

This paper investigates the problem of information asymmetry and agency cost in the context of insider trading as well as the mechanism to mitigate the insider trading abnormal return among Thai Listed Firms. By examining both internal and external mechanisms, the researcher found out that better auditor firm and more frequent auditing committee meetings are associated with reducing insider trading abnormal return. Additionally, the corporate governance measurement in terms of Corporate Governance Report (CGR) developed by Thai Institution of Directors showed no significant relationship with the insider trading abnormal return. However, despite that the corporate governance index showed no results, board effectiveness and ownership concentration which have been linked to more effective monitoring of management in prior research still play an important role in reducing the profitability of insider trading. Furthermore, foreign institutional investors play a more active role on mitigating the insider trading profit when comparing with domestic investors.