APPROACHES TO INSIDER TRADING

Abstract

Insider trading prevents transparency of the market and undermines the investors' confidence. Although it is forbidden at many financial markets, it has not been decided whether to forbit or not. With the increasing number of countries which have stock exchange, there is an increasing number of countries that promulgate regulations. However, less than half of the countries apply regulations. In this study, prohibitive and supportive approaches to insider trading are reviewed and the topic is discussed with its sociologic, economic and judicial dimensions. The research concludes that socioeconomic impacts of insider trading to market, especially to investors, must be empirically tested.