COMPAS Poll/Survey
February 28, 2011

Leaks in M&A’s and Insider Trading:
Business Calls for Much Tougher Action by Authorities;
OSC, Justice System, Federal Government Condemned for Insufficient Action

  BDO Dunwoody Weekly CEO/Business Leader Poll by COMPAS in Canadian Business
Business and Finance

News reports have talked about mining companies targeted for acquisition leaking information to drive up the prices of their shares prior to acquisition in order to benefit friends and insiders. Statistical analysis by a Queen’s business professor showed that a larger number of these target companies experienced large run-ups before the merger that cannot be explained by anything other than misuse of insider information. In this setting, the CEOs and business leaders on the COMPAS business panel were asked for their thoughts on the subject.

By an immense margin, panelists call for tougher enforcement of the law. Eighty-five percent call for tougher enforcement—54% demand much tougher enforcement.

While there is a virtual consensus favouring tougher law enforcement, panelists do not agree among themselves about the magnitude or location of the problem. Despite the resource-oriented, Vancouver Stock Exchange’s checkered, historical reputation, panelists are not convinced that the mining industry experiences any more insider trading than other sectors. They are also not convinced that Canadian companies experience more such lapses than U.S. companies despite the appearance of tougher enforcement south of the border.

These are the key findings from this past week’s Internet survey of CEOs and business leaders on the COMPAS panel. The weekly business survey is undertaken for Canadian Business magazine under sponsorship of BDO Dunwoody LLP.

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