Abstract:

By using event study, this paper analyzed whether the market significantly react to the insider relatives trading behaviors, and study the effect of internal control to them. This paper finds the following results. First, insider relatives times sales successfully, and the market reaction to sales is significantly negative. Second, for the listed companies of lower internal control quality, insider relatives can more successfully sell the stocks at the right moments when the stock price increase significantly, and the market reacts more strongly to the sales.