During the TCFA Best Paper Symposium in New York on October 13, CEIBS Professor of Finance and Accounting Oliver Rui will present an award winning paper he co-authored. "Ownership Structure and Insider Trading: Evidence from China" won the 3rd Annual TCFA Best Paper Award from The Chinese Finance Association (TCFA).

The paper examines data regarding insiders’trading in China and analyzes how ownership structure shapes the market reaction to insiders’transactions.The research findings show that the cumulative abnormal return (CAR) to insiders’share purchases is a convex function of the percentage of shares owned by the largest shareholder. When the largest shareholder is government-related or the control rights of block holders exceed their cash flow rights, the CAR to insiders’purchases is lower.

The research findings also show that the market reaction to insiders’purchases is more positive for firms that are audited by Big 4 auditors. However the authors say they have not found a significant relationship between the market reaction and the ownership structure for insiders’sales. The research also shows that tunneling activities captured by the use of other receivables is less severe for the firms with larger market reaction to insiders’ purchases.

The paper was co-authored by Prof. Rui and Prof. Qing He of Renmin University.