In two recent papers, including "Inside the 'Black Box' of Private In-House Meetings," authors Robert M. Bowen, Shantanu Dutta, Songlian Tang, and PengCheng Zhu, consider the timing of trading and the relationship of trading to meetings between company insiders and investors and analysts. The data collected is based on firms listed on the Shenzhen Stock Exchange in China. Companies listed on the exchange are required to disclose summary reports within two trading days of private meetings. This disclosure requirement is meant to level the playing field in much the same way as Regulation FD does in the United States. The various tests consider insider trading patterns at different time periods around private meeting dates. Given that in the United States there is no requirement to disclose corporate access opportunities, the data sets and analyses described in the papers may provide some insights. The authors found evidence of profitable insider trading around the occurrence of such private meetings. While causality cannot be established, the patterns are interesting. Requiring disclosure of the occurrence of such meetings also is an interesting approach and might be a useful extension to existing Regulation FD requirements at a time when corporate access is seen as raising a number of concerns.
Originally published May 24, 2018
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