| dc.description.abstract | This paper investigates the short-term abnormal return among primary insiders at the Oslo
Stock Exchange following the implementation of the EU Market Abuse Regulation framework.
The regulatory changes involve stricter regulation governing market manipulation, false
disclosure of inside information, and reporting standards, intending to ensure the financial
market’s attractiveness in Norway. This study expands on previous literature and provides
contributing evidence on how regulatory changes affect the short-term market reaction.
Initially, evidence shows that the abnormal return among primary insiders declines significantly
from 4.23% to 2.70% after the government announces the future introduction of the new
framework, before declining to 1.04% after the implementation. A decline in short-term market
reaction implies fewer opportunities to exploit material non-public information. Further, we
observe that the results obtained in our report contradict that the size of the transaction solely
drives the abnormal return, as it stipulates that “Medium-sized” transactions lead to greater
short-term market reactions. Evidence supports that the ability of primary insiders to achieve
abnormal returns is influenced by their position; mainly among “Board Members” and
“Executives”. We also find that purchase transaction leads to a positive abnormal return in the
short term. Conversely, sales transactions often lead to negative market reactions, as other
market participants struggle to differentiate between the anticipation of negative updates
regarding the firm’s performance and actions taken by primary insiders for diversification or
liquidity purposes. Lastly, we discuss policy implications, such as alternative investment
strategies among primary insiders and the urge to circumvent the regulatory changes, as
possible implications to the new EU MAR framework. | en_US |
