ADALET KAVRAMI ve ERDEM AHLAKI AÇISINDAN İÇERİDEN ÖĞRENENLERİN TİCARETİ

Marmara Üniversitesi øø%)'HUJLVL YIL 2010&ø/7;;,;, SAYI II, S. 513-526 INSIDER TRADING FROM THE PERSPECTIVES OF JUSTICE AND VIRTUE ETHICS Arzu ÖZSÖZGÜN * Emel ESEN1** Abstract Justice is about the moral choices which respect the measure of the people’s rights, but in the respect of virtue ethics, it emphasizes the character of the moral agent, rather than rules or consequences. The purpose of the study is to investigate the insider trading which is about buying or selling of securities on the basis of material, non public information, with ethical judgements as justice and virtue ethics from the perspectives of Business Administration Students. The data will be collected by different scenarios which reflect the insider trading in the stock market. The results show that insider trading should be analyzing according to the condition of this perspectives in order to find out that is ethical or unethical. Key Words: Insider trading, Business ethics, Justice and Virtue Ethics ADALET KAVRAMI ve ERDEM AHLAKI AÇISINDAN ød(5ø'(1gö5(1(1/(5ø17ø&$5(7ø Özet $GDOHWELUH\OHULQKDNODUÕQDLOLúNLQ|OoPOHUL\DQVÕWDQDKODNLVHoLPOHULNHQ HUGHP DKODNÕ VRQXoODUD YH\D NXUDOODUD QD]DUDQ DKODNL GDYranan/davranacak ELUH\LQ NDUDNWHULQL \DQVÕWPDNWDGÕU $UDúWÕUPDQÕQ DPDFÕ LúOHWPH |÷UHQFLOHULQLQ SHUVSHNWLIL QH]GLQGH DGDOHW YH HUGHP DKODNÕ DoÕVÕQGDQ |÷UHQHQOHULQ WLFDUHWLQL DUDúWÕUPDNWÕU$UDúWÕUPD\DLOLúNLQYHULOHUVHUPD\HSL\DVDVÕQGDLoHUGHQ|÷UHQHQOHUi \DQVÕWDQIDUNOÕVHQDU\RODULOHWRSODQPÕúWÕU6RQXoODUJ|VWHUPHNWHGLUNL|÷UHQHQOHULQ WLFDUHWLQLQHWLNROXSROPDGÕ÷ÕQDNDUDUYHUHELOPHNLoLQEXWHRULOHUHLOLúNLQGXUXPODU oHUoHYHVLQGHQEDNÕOPDOÕGÕU Anahtar Kelimeler: øoHULGHQ g÷UHQHQOHULQ 7LFDUHWL øú HWL÷L $GDOHW YH (UGHP$KODNÕ * Lecturer-3K'<ÕOGÕ]7HFKQLFDO8QLYHUVLW\ Faculty of Economics and Administrative Sciences, Business Administration Department, Besiktas, 34349, ** 5HV$VVLVW <ÕOGÕ] 7HFKQLFDO 8QLYHUVLW\ )DFXOW\ RI (FRQRPLFV DQG $GPLQLVWUDWLYH Sciences, Business Administration Department, Besiktas, 34349, 513 g÷U*|U$U]Xg=6h=*h1 $UDú*|U(PHO(6(1 1. Introduction Having all of the public information about companies which is traded in capital markets is essential for investors and smoothly working capital markets. The main function of capital market is to transfer funds efficiently between borrowers and lenders and so to process the allocation of capital 2. In this process, the prices of stocks are main indicator of investors’ assessment of companies’ past performances and future prospects have an important role in this transaction. For this reason having any non-public information about the company provides crucial advantage of its owner. Since people at such a position may use the information to generate gains at the expense of other investors 3, insider trading and its regulation so important for market operation. 2. The Nature of Insider Trading Insider trading refers to buying or selling of securities on the basis of (inside) information that is material and not publicly available 4. As inside information is privileged, price sensitive and material non-public information 5, prior knowledge of the information that will affect prices of the securities and investment decisions of capital market investor when publicly announced 6. The information can be obtained from large number of sources from which such private information can be used unfairly for financial or other gain 7 . Insider is any individual or group that is able to possess crucial, unpublished information about the company and trading on securities to make profit or a loss 8. Status of the insider is not important so the trader has extended its scope from corporate insiders to any person such as temporary insiders or constructive insiders who gain crucial information indirectly from such managers or directors 9. 2 -3 .UDKQHQ YH GL÷HUOHUL “Insider Trading and Portfolio Structure in Experimental Asset Markets With a Long-Lived ”, The European Journal of Finance, 1999, Vol. 5, s. 29. 3 Krahnen ve di÷HUOHULa.g.m., s. 29. 4 Panagiotis Lekkas, “Insider Trading and the Greek Stock Market”, A European Review, Vol. 7, No 4, 1998, p. 193, Lawrance M. Ausubel, “Insider Trading In A Rational Expectations Economy”, The American Economic Review, 1990, Vol. 80, No. 5, s. 1023, Julan Du and Shang-Jin Wei, “Does Insider Trading Raise Market Volatility?”, The Economic Journal, 2004, 114, s. 919, Peter-Jan Engelen and Luc Van Liedekerke, “The Ethics of Insider Trading Revisited”, Journal of Business Ethics, 2007, Vol. 74, No 4, s.498, Elizabeth Szockyj-Gilbert Geis, “Insider Trading Patterns And Analysis”, Journal of Criminal Justice, 2002, Vol. 30, No 4, s. 273. 5 Ako Doffou, “Insider Trading: A Review of Theory and Empirical Work”, Journal of Accounting and Finance Research, Vol. 11, No 1, 2003, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1028898, [Accessed 21.04.2010] 6 John Elliott ve di÷HUOHUL “The Association Between Insider Trading and Information Announcements”, The RAND Journal of Economics, Vol. 15, No. 4, 1984, p. 528, Meral 9DUÕú7H]FDQOÕInsider Trading and Market Manipulation, Istanbul:IMKB, 1996, p.9. 7 Phillip Anthony O’Hara, “Insider Trading In Financial Markets: Legality, Ethics, Efficiency”, International Journal of Social Economics, 2001, Vol. 28, No 10/11/12, s. 1047. 8 Tezcanli, a.g.m., s. 9, Engelen and Liedekerke, a.g.m., s.499. 9 Engelen and Liedekerke, a.g.m., s.499, Ausubel, a.g.m., s. 1024, O’Hara, a.g.m., s. 1047. 514 Corporate insiders can include directors or officers of the corporation or major shareholders, those who have managerial positions in the company, are assumed to have superior information about the company’s future prospects, unavailable to the investing public and the current shareholders 10. However, temporary insiders or constructive insiders can refer to outside auditors, lawyers, investment bankers who are temporarily retained by the corporation but have access to material non-public information 11 or persons who have a contractual or supply linkage to such a firm, such as those who print annual reports or stockbrokers who may unintentionally gain an information advantage or they can refer to managers’ or directors’ friends, family members, or close but to external business associates 12. Portfolio diversification and liquidity adjustment, corporate control, sentimental reasons 13 and also because of changes in wealth, preferences, and consumption opportunities can be the reasons for insiders to trade stock. Unlike other investors, insiders have access to price sensitive and material information and may trade to realize the benefits of that information especially for the second category 14. Although it is generally associated with illegal conduct, insider trading term actually includes both legal and illegal conduct 15. According to Securities and Exchange Commission’s (SEC) definition, “Legal in (...truncated)