1. The Real Effect of the Initial Enforcement of Insider Trading Laws Discussed by Ju-Fang Yen Department of Finance, National Taiwan University 7 December 2012

2. Here comes your footer Overview 2012 NTU International Conference on Finance Initial Enforcement of Insider Trading Laws Investment-to-price sensitivity Managerial Learning Hypothesis Market Frictions Hypothesis Enforcement enables stock price to provide more information to guide managers’ investment decisions, leading to increases in investment efficiency and then improvement in firm operation performance. Investment-to-price sensitivity or

3. Here comes your footer This Paper  Very complete and clearly-structure  Conducts a very deep and comprehensive analysis and has very solid empirical results  Use a global data to test a quite important topic  Not only links up the enforcement of insider trading law with corporate investment, but discusses the reason behind the relation also  Thus, I can only give some minor comments 2012 NTU International Conference on Finance

4. Here comes your footer Comment 1  Fernandes and Ferreira (2009) have showed that enforcement of insider trading laws improves price informativeness.  But they show that the improvement is concentrated in developed markets. In emerging market countries, price informativeness changes insignificantly after the enforcement.  Therefore, it is interesting to further test whether the real effect of enforcement on investment efficiency is also concentrated in developed markets and insignificant in emerging markets. (It could be added after Table 7)  If the answer is “Yes,” then the test can robustly support Managerial Learning Hypothesis in this article. 2012 NTU International Conference on Finance

5. Here comes your footer Comment 2  The PROXY used in Table 7 is also the potential variable that may affect the dependent variable, Adj.INVEST.  For example, Guo and Savickas (2008) argues that the changes in idiosyncratic return volatility provide a proxy for changes in investment opportunities, implying the relationship exists between ΔNSYNCH and investment.  Therefore, instead of just interacting PROXY with the main independent variables, it would be better to also control for the possible channel. 2012 NTU International Conference on Finance

6. Here comes your footer Comment 3  As for the measure INVEST, which is defined as the sum of the change in net PPE, the change in inventory, and R&D expenditures, scaled by lagged total assets.  Previous studies regard capital expenditures as an important item when measuring investments, for example, Chen, Goldstein, and Jiang (2007).  M&A is also an representative proxy for investments.  Why not including the two items? 2012 NTU International Conference on Finance

7. Here comes your footer Comment 4  The data is collected from Worldscope in the period of 1982-2003.  The authors could explain more about why ending year is 2003.  Is it because some other factors or events that happened after 2003 will distract the results? 2012 NTU International Conference on Finance

8. Here comes your footer Typos 1.The time is not consistently subscript in some equations. The equation (3) in page 16: the time subscript of CF is inconsistent with the definition of Adj.INVEST and should be revised to be t. ‚In page 55, the time subscript of ITENF should be revised to be t-1 2.The equation (4) in page 21 is inconsistent with context and it seems that a plus notation is missing. 3.In page 28, the event years are inconsistent with the preceding definition in the article. It should be revised to be [+1,+3] and [-2,0], respectively. 4.In page 28, “Columns (4) and (5) in Table 7 report……” It should be “Columns (6) and (7)…” 2012 NTU International Conference on Finance

9. Here comes your footer Reference  Chen, Q., Goldstein, I., Jiang, W., 2007. Price informativeness and investment sensitivity to stock price. Review of Financial Studies 20, 619-650.  Fernandes, N., Ferreira, M.A., 2009. Insider trading laws and stock price informativeness. Review of Financial Studies 22, 1845-1887.  Guo, H., Savickas, R., 2008. Average idiosyncratic volatility in G7 Countries. Review of Financial Studies 21, 1259-1296. 2012 NTU International Conference on Finance