Finance Research Letters 47 (2022) 102767 Available online 24 February 2022 1544-6123/© 2022 Elsevier Inc. All rights reserved. Insider trading on Ottoman sovereign default: The Ottoman General Debt Bond at European and ˙ Istanbul fnancial markets Avni ¨ Onder Hanedar a, * , Elmas Yaldız Hanedar b , Mehmet G¨ okhan G¨ oktan c a Faculty of Political Sciences and MUFAM, Sakarya University, Sakarya, Turkey b Sakarya University of Applied Sciences, Sakarya, Turkey c ˙ Istanbul Okan University, ˙ Istanbul, Turkey A R T I C L E INFO JEL codes: D84 G14 N23 N73 Keywords: Ottoman empire Sovereign default Structural break Sovereign bond Insider trading Effcient market ABSTRACT Using effcient market hypothesis and structural break frameworks, this paper examines insider trading during the Ottoman sovereign default, as historical narratives claim information leakage. If the narratives were true, informed traders would sell the Ottoman government’s bonds to avoid excessive losses before the default, creating a negative price shock in case of market ineffciency. This paper employs the Ottoman General Debt Bond prices in ˙ Istanbul, London, and Paris compiled from Ottoman and European newspapers. The results do not confrm price shocks just before the sovereign default announcement. Thus, investors seem to have anticipated the default before its offcial declaration. 1. Introduction Insider trading is one of the crucial anomalies which is associated with market ineffciency and has extensively been studied (Fidrmuc et al., 2006; Aktas et al., 2008; Olmo et al., 2011; Leng and Zhao, 2014; Dissanaike and Lim, 2015; Qiu et al., 2018; Zhao et al., 2021). It has also attracted the attention of researchers from a historical perspective for the periods during which insider trading was legal (Banerjee and Eckard, 2001; Koudijs, 2015). For these limited number of studies, the main goal is to provide empirical evidence to examine the anecdotal evidence on stock markets. Event study analysis constitutes the core of empirical applications where public announcements of market-sensitive information are taken as benchmarks for potential insider trading activities. In these empirical applications data are scrutinized to reveal abnormal returns exploited by informed traders where the capital asset pricing model is generally used as a benchmark model. Additionally, the break tests are used to identify negative/positive price shocks relating to insider trading (Olmo et al., 2011). According to the effcient market hypothesis, prices refect all available information and, therefore, all excess proft opportunities will be eliminated. Hence, in its strong-form, informed trading would be impossible. Since some researchers do not have an available market index to test for strong-form market effciency, they perform their analysis solely using price data (Banerjee and Eckard, 2001; Dissanaike and Lim, 2015). Consequently, the lack of detailed information leads to investigating weak-form market effciency as indirect evidence for insider trading. Observing weak-form market ineffciency does not directly mean uninformed trading activity. * Corresponding author. E-mail address: onderhanedar@sakarya.edu.tr (A. ¨ O. Hanedar). Contents lists available at ScienceDirect Finance Research Letters journal homepage: www.elsevier.com/locate/frl https://doi.org/10.1016/j.frl.2022.102767 Received 14 November 2021; Received in revised form 13 February 2022; Accepted 22 February 2022