Wednesday, July 24, 2019
Sehwa Kim and Seil Kim have posted Fragmented Securities Regulation: Neglected Insider Trading in Stand-Alone Banks on SSRN with the following abstract:
We examine whether regulatory fragmentation, by separating disclosure venues, affects stock price efficiency. Publicly traded stand-alone banks submit mandatory filings to bank regulators via FDICconnect rather than to SEC EDGAR. We find that the short-run market reaction to insider-trading filings on FDICconnect is almost non-existent and significantly smaller than for these filings on SEC EDGAR. However, the differences in returns disappear in the long run, suggesting that the short-run difference is not driven by difference in the information content of the filings. Our study shows that regulatory fragmentation significantly affects stock price efficiency.