Evidence on UK directors' compliance with disclosure timing regulations
| Pages | 381-393 |
| Date | 20 November 2007 |
| Published date | 20 November 2007 |
| DOI | https://doi.org/10.1108/13581980710835245 |
| Author | Brian Balmforth,Bruce M. Burton,Stuart R. Cross,David M. Power |
| Subject Matter | Accounting & finance |
Evidence on UK directors’
compliance with disclosure
timing regulations
Brian Balmforth
School of Law, University of Dundee, Dundee, UK
Bruce M. Burton
School of Accounting and Finance, University of Dundee, Dundee, UK
Stuart R. Cross
School of Law, University of Dundee, Dundee, UK, and
David M. Power
School of Accounting and Finance, University of Dundee, Dundee, UK
Abstract
Purpose – This study aims to examine the extent to which UK directors failed to report their share
trading in the timeframe required by extant regulations in the run-up to the changes in insider trading
law contained in the Financial Services and Markets Act.
Design/methodology/approach – The study investigates the extent of non-compliance amongst
the 7,461 trades reported to the London Stock Exchange by the directors of UK firms in the year 2000.
Findings – The results indicate that 1,055 (or 14 per cent) of directors’ trades were reported late (or
with the transaction date absent), with these being concentrated amongst “buy” transactions in both
absolute and pro-rata terms.
Practical implications – The evidence suggests that non-compliance in the reporting of directors’
transactions was common at the time when UK authorities chose to toughen the legal framework
governing the conduct of trading based on private price-sensitive information. Once sufficient time has
elapsed, further studies should be able to provide evidence about the iterative impact of the new legal
framework by comparing results with the findings of this study.
Originality/value – This is the first study to report a detailed examination of the extent of
non-compliance in the timing of directors’ trades in their own equity.
Keywords Insider trading,Compliance costs, Disclosure, Directors,Financial reporting
Paper type Research paper
1. Introduction
Trading by directors in their own firms’ equities has been the subject of numerous
empirical studies in recent years. The focus in most of this literature has been on the
profitability of the transactions – very little work has examined the completeness and
timeliness of the reporting of such trades. However, reporting errors and omissions
represent a serious shortcoming in the regulatory information available and a
substantive departure from corporate governance best practice. In particular,
incomplete reporting of directors’ trades appears to be at odds with the notion of
The current issue and full text archive of this journal is available at
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The authors would like to thank an anonymous referee for his helpful suggestions on improving
the paper.
Evidence on UK
directors’
compliance
381
Journal of Financial Regulation and
Compliance
Vol. 15 No. 4, 2007
pp. 381-393
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980710835245
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