Date: 14 May 2021, Friday
Time: 4:00pm to 5:00pm
(Singapore Time Zone, GMT +8)

This webinar is jointly organised by Risk Management Institute and Centre for Quantitative Finance.

Title: Becker Meets Kyle: Legal Risk and Insider Trading

Dr. Emiliano Pagnotta (Imperial College London)

Abstract: Do illegal insiders internalize legal risk? We address this question with hand-collected data from 530 SEC investigations. Using two plausibly exogenous shocks to expected penalties, we show that insiders trade less aggressively and earlier and concentrate on tips of greater value when facing higher risk. The results match the predictions of a model where an insider internalizes the impact of trades on prices and the likelihood of prosecution and anticipates penalties in proportion to trade profits. Our findings lend support to the effectiveness of U.S. regulations’ deterrence and the long-standing hypothesis that insider trading enforcement can hamper price informativeness.

Dr. Emiliano Pagnotta is an Assistant Professor of Finance at Imperial College Business School. His research focuses on the exchange and valuation of financial assets and the organization and evolution of the markets where those assets trade in. Recent work by Dr. Pagnotta analyzes the consequences of speed and fragmentation in financial markets, the identification of private information in stock and derivatives markets, and the valuation of Bitcoin and other blockchain assets. His research is regularly presented in leading academic and professional conferences and published in academic journals such as Econometrica and The Review of Financial Studies.

Before joining Imperial College, Emiliano Pagnotta was at the New York University Stern School of Business. He holds a BA in Economics from the University of Buenos Aires, an MA in Economics from Universidad de San Andrés, Argentina, and a Ph.D. in Economics from Northwestern University.

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please visit Risk Management Institute website.
For enquiries, please contact Sinta at sintayo@nus.edu.sg.

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