Corporate ethics under scrutiny: shareholder and manager trading in financially distressed firms

IF 3.2 Q2 ETHICS

Asian Journal of Business Ethics Pub Date : 2024-12-11 DOI:10.1007/s13520-024-00230-8

Dachen Sheng, Heather A. Montgomery

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引用次数: 0

Abstract

This study explores the ethical implications of information asymmetry in corporate governance, focusing on insider trading by firm managers and the largest shareholders. We empirically analyze trading behaviors around distress events and their subsequent recoveries in the context of the Chinese Stock Exchange. The findings reveal that both managers and the largest shareholders exploit their privileged access to information for personal gain, significantly impacting other investors. However, this behavior is less prevalent among state-owned enterprises (SOEs), where the largest shareholders do not engage in opportunistic trading. In contrast, family-owned firms exhibit a heightened use of insider information, with the largest shareholders strategically trading to maximize personal benefits. Our analysis extends to unobservable insider information, demonstrating that the largest shareholders’ trades are strongly associated with negative performance events, reinforcing the presence of information asymmetry. These results underscore the need for stronger regulatory frameworks to safeguard investor interests and address ethical concerns in financial markets.

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企业道德受到审视：股东和经理在陷入财务困境的公司进行交易

本研究探讨了公司治理中信息不对称的伦理含义，重点关注公司经理和最大股东的内幕交易。本文以中国证券交易所为背景，实证分析了危机事件前后的交易行为及其后续复苏。研究结果显示，管理者和大股东都利用他们获取信息的特权谋取私利，对其他投资者产生了重大影响。然而，这种行为在国有企业中不那么普遍，因为国有企业的大股东不会参与投机交易。相比之下，家族企业对内幕信息的利用程度更高，最大的股东战略性地进行交易，以实现个人利益最大化。我们的分析扩展到不可观察的内幕信息，表明最大股东的交易与负面业绩事件密切相关，强化了信息不对称的存在。这些结果强调需要加强监管框架，以保护投资者利益，解决金融市场的道德问题。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Asian Journal of Business Ethics ETHICS-

CiteScore

2.60

自引率

38.50%

发文量

期刊介绍： The Asian Journal of Business Ethics (AJBE) publishes original articles from a wide variety of methodological and disciplinary perspectives concerning ethical issues related to business in Asia, including East, Southeast and South-central Asia. Like its well-known sister publication Journal of Business Ethics, AJBE examines the moral dimensions of production, consumption, labour relations, and organizational behavior, while taking into account the unique societal and ethical perspectives of the Asian region. The term ''business'' is understood in a wide sense to include all systems involved in the exchange of goods and services, while ''ethics'' is understood as applying to all human action aimed at securing a good life. We believe that issues concerning corporate responsibility are within the scope of ethics broadly construed. Systems of production, consumption, marketing, advertising, social and economic accounting, labour relations, public relations and organizational behaviour will be analyzed from a moral or ethical point of view. The style and level of dialogue involve all who are interested in business ethics - the business community, universities, government agencies, non-government organizations and consumer groups.The AJBE viewpoint is especially relevant today, as global business initiatives bring eastern and western companies together in new and ever more complex patterns of cooperation and competition.