Abstract: It is of great significance to effectively regulate executives’ selling behaviors to promote the long-term, stable and healthy development of capital market. Based on the “New Regulation on Insider Selling” in China and using data from A-share listed companies from 2012 to 2021, this paper investigates the impact of restricting executives’ opportunistic stock selling on stock price informativeness. The results show that restricting executives’ opportunistic stock selling can help improve stock price informativeness. This effect is more significant when the selling scale is large and when there are stock sales by core executives. Moreover, this promotion effect is also strengthened for firms that are exposed to a poor information environment and prone to manipulate information disclosure. Further analysis suggests that restricting executives’ opportunistic stock selling can promote firm-level information collection by external investors, as evidenced by wider institutional shareholdings and more attention from investors. In addition, restricting executives’ opportunistic stock selling makes a firm’s current stock price more reflective of its future earnings. The main conclusion still holds after a series of robustness tests. Overall, this paper enriches the literature on both insider trading supervision and stock price informativeness, and has enlightenment for regulatory authorities to improve the design of stock selling system and promote the high-quality development of capital market.

Key words: new regulation on insider selling, opportunistic stock selling, stock price informativeness, insider trading