Seite - 127 - in Austrian Law Journal, Band 2/2019

ALJ 2019 Managers’ Transactions 127 2. Equal Treatment of Investors Assuming that transactions by managers are based on an advantage of information, the reporting obligation also serves to ensure equal opportunities for investors in terms of information:18 Due to the requirement of disclosing managers' transactions as soon as possible, the knowledge advantage of managers over the investing public is limited to a relatively short period of time. This reduces the information asymmetry between managers and other investors.19 Whether and how effectively the reporting obligation can contribute to this goal depends, however, to a large extent on how it is designed. In particular, reporting provisions which oblige disclosure after the transaction has been carried out (post-trading disclosure) cannot completely diminish information asymmetry, but merely reduce it.20 Although the transaction has to be reported to the investor public relatively quickly – typically within several days of its conclusion – managers are, however, able to make use of their privileged access to information during this period. For a complete reduction of the asymmetry, a reporting obligation before the execution of the transaction (pre-trading disclosure) or even a ban on managers' transactions would be more suitable: With the former, a possible information advantage is already priced into the market before the execution of the transaction.21 With the latter, the transaction is forbidden per se, and managers cannot then benefit from an information advantage anyway.22 Moreover, the suitability of the reporting requirement to reduce information asymmetry also depends on which transactions have to be reported. This objective is more important if only those transactions are to be reported in which an information advantage can be exploited at all; conversely, the significance decreases – for the same reasons as with the signal effect of the reports –23 if transactions are to be disclosed in which the privileged information basis of a person obliged to report cannot be exploited at all. 18 Fleischer, supra note 10, at 1220. 19 Kumpan, supra note 13, at 448; see also Martina Stegmaier, § 19 Offenlegungspflichten, in Handbuch zum Marktmissbrauchsrecht, 7 (Andreas Meyer/Thomas Rönnau/Rüdiger Veil eds, 2018). 20 See Moritz Diekgräf, Directors‘ Dealings 138 (2017); Pfüller, supra note 16, at 26. 21 If managers had to report planned trades before they were executed, the information about the intended transaction and the conclusions that the investors draw from it would be priced into the market - assuming a (largely) efficient capital market - before the manager concludes the transaction. If, for example, the manager reports the intended purchase of shares, this can signal to the market that the manager considers the share to be undervalued. Investors will therefore try to profit from the undervaluation and acquire shares of the issuer themselves. The rising demand for the shares of the issuer in question increases their price. As a result, the share would no longer be undervalued at the time when the manager is allowed to carry out the reported transaction. The manager would therefore have to pay the "true" value of the share and would have no (or only a reduced) arbitrage opportunity; see Fleischer, supra note 10, at 1228. 22 In fact, this prohibition model, which is typical for insider law, has also found its way into the managers' transaction regime for the first time with the MAR: In principle, transactions conducted on the manager’s own account are permitted and only have to be disclosed by the manager. During a period of 30 calendar days before the (obligatory) publication of an interim or annual report, however, such transactions are completely prohibited (Art 19 para 11 MAR). 23 See chapter II.B.1 above.