Insider Trading and Innovation

Authors

Ross LevineFollow
Chen LinFollow
Lai WeiFollow

Start Page

749

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.

Recommended Citation

Levine, Ross; Lin, Chen; and Wei, Lai (2017) "Insider Trading and Innovation," Journal of Law and Economics: Vol. 60: No. 4, Article 6.
Available at: https://chicagounbound.uchicago.edu/jle/vol60/iss4/6