Skip to main content Accessibility help

Transgovernmental Networks and Domestic Policy Convergence: Evidence from Insider Trading Regulation

  • David Bach (a1) and Abraham L. Newman (a2)


Cross-border cooperation among domestic regulators and public officials has become a defining feature of global governance. While a number of studies have tracked the emergence and institutionalization of such transgovernmental networks, less is known about their effect on domestic policy. This study explores this link for the important case of insider-trading regulation in original data for 116 countries between 1977 and 2006. It offers quantitative evidence that transgovernmental cooperation is related to domestic policy convergence but that the relationship is more complex than often assumed. Direct ties to powerful regulators increases a jurisdiction's likelihood of adopting internationally promoted policies such as insider-trading rules. Separately, membership in the International Organization of Securities Commissions (IOSCO), a forum designed to diffuse best practices among regulators, increases a jurisdiction's likelihood of subsequently enforcing newly adopted policies. The findings in this study suggest that different network components are associated with distinct aspects of domestic policy convergence. The results are directly relevant for current public policy debates about the reregulation of global financial markets as transgovernmental networks among domestic regulators have assumed a critical role.



Hide All
Bach, David. 2010. Varieties of Cooperation: The Domestic Institutional Roots of Global Governance. Review of International Studies 36 (3).
Bach, David, and Newman, Abraham L.. 2007. The European Regulatory State and Global Public Policy: Micro-Institutions, Macro-Influence. Journal of European Public Policy 14 (6):827–46.
Bainbridge, Stephen M. 1999. Securities Law: Insider Trading. New York: Foundation Press.
Beck, Nathaniel, Katz, Jonathan N., and Tucker, Richard. 1998. Taking Time Seriously: Time-Series-Cross-Sectional Analysis with Binary Dependent Variables. American Journal of Political Science 42 (4):1260–88.
Beny, Laura Nyantung. 2002. The Political Economy of Insider Trading Legislation and Enforcement: International Evidence. The Harvard John M. Olin Discussion Paper Series, Discussion Paper 348. Harvard Law School, Cambridge, Mass. Available at ⟨⟩. Accessed 2 April 2010.
Bermann, George A. 1993. Regulatory Cooperation with Counterpart Agencies Abroad: The FAA's Aircraft Certification Experience. Law and Policy of International Business 24:669781.
Bhattacharya, Utpal, and Daouk, Hazem. 2002. The World Price of Insider Trading. Journal of Finance 57 (1):75108.
Box-Steffensmeier, Janet, and Jones, Bradford S.. 2004. Event History Modeling: A Guide for Social Scientists. Cambridge: Cambridge University Press.
Brooks, Sarah M. 2005. Interdependent and Domestic Foundations of Policy Change: The Diffusion of Pension Privatization Around the World. International Studies Quarterly 49 (2):273–94.
Cameron, David R. 1995. Transnational Relations and the Development of European Economic and Monetary Union. In Bringing Transnational Actors Back In: Non-State Actors, Domestic Structures and International Institutions, edited by Risse-Kappen, Thomas, 3778. Cambridge: Cambridge University Press.
Cardenas, Sonia. 2003. Transgovernmental Activism: Canada's Role in Promoting National Human Rights Commissions. Human Rights Quarterly 25 (3):775–90.
Carter, David B., and Signorino, Curtis S.. 2007. Back to the Future: Modeling Time Dependence in Binary Data. Working paper. University of Rochester. New York. Available at ⟨⟩. Accessed 2 April 2010.
Coleman, William Donald. 1996. Financial Services, Globalization and Domestic Policy Change. New York: St. Martin's Press.
Correlates of War Project. 2002. Direct Contiguity Data, 1816–2001, Version 3. Updated version available at ⟨⟩. Accessed 10 December 2009.
Correlates of War Project. 2008. State System Membership List, Version 2008.1. Available at ⟨⟩. Accessed 2 April 2010.
Djelic, Marie-Laure, and Kleiner, Thibaut. 2006. The International Competition Network: Moving Towards Transnational Governance. In Transnational Governance: Institutional Dynamics of Regulation, edited by Djelic, Marie-Laure and Sahlin-Andersson, Kerstin, 287307. Cambridge: Cambridge University Press.
Dobbin, Frank, and Garrett, Geoffrey. 2006. Introduction: The International Diffusion of Liberalism. International Organization 60 (4):781810.
Downs, George W., Rocke, David M., and Barsoom, Peter N.. 1996. Is the Good News About Compliance Good News About Cooperation? International Organization 50 (3):379406.
Drezner, Daniel W. 2007. All Politics Is Global: Explaining International Regulatory Regimes. Princeton, N.J.: Princeton University Press.
European Union. 2009. Enlargement Archives. Available at ⟨⟩. Accessed 2 April 2010.
Ho, Daniel E., Imai, Kosuke, King, Gary, and Stuart, Elizabeth A.. 2007. Matching as Nonparametric Preprocessing for Reducing Model Dependence in Parametric Causal Inference. Political Analysis 15 (3):199236.
IOSCO. 1998. Objectives and Principles of Securities Regulation. Madrid, Spain: International Organization of Securities Commissions.
IOSCO. 2003. Objectives and Principles of Securities Regulation. Madrid, Spain: International Organization of Securities Commissions.
Kahler, Miles. 2009. Networked Politics: Agency, Power, and Governance. Ithaca, N.Y.: Cornell University Press.
Keohane, Robert O. 1978. The International Energy Agency: State Influence and Transgovernmental Politics. International Organization 32 (4):929–51.
Keohane, Robert O., and Nye, Joseph S.. 1974. Transgovernmental Relations and International Organizations. World Politics 27 (1):3962.
King, Gary, and Zeng, Langche. 2001. Explaining Rare Events in International Relations. International Organization 55 (3):693715.
La Porta, Rafael, Lopez-de-Silanes, Florencio, and Shleifer, Andrei. 2006. What Works in Securities Laws? Journal of Finance 61 (1):132.
Laurence, Henry. 1999. Spawning the SEC. Indiana Journal of Global Legal Studies 6 (2):647–83.
Leeds, Brett Ashley, Mattes, Michaela, and Vogel, Jeremy S.. 2009. Interests, Institutions, and the Reliability of International Commitments American Journal of Political Science 53 (2):461–76.
Leuven, Edwin, and Sianesi, Barbara. 2003. PSMATCH2: Stata Module to Perform Full Mahalanobis and Propensity Score Matching, Common Support Graphing, and Covariate Imbalance Testing. Statistical Software Components No. S432001.Boston: Boston College Department of Economics.
Lipson, Michael. 2005–2006. Transgovernmental Networks and Nonproliferation: International Security and the Future of Global Governance. International Journal 61 (1):179–98.
Longstreth, Bevis. 1983. The SEC After Fifty Years: An Assessment of Its Past and Future. Columbia Law Review 83 (6):1593–613.
Lütz, Susanne. 1998. The Revival of the Nation-State? Stock Exchange Regulation in an Era of Globalized Financial Markets. Journal of European Public Policy 5 (1):153–68.
Mansfield, Edward D., and Pevenhouse, Jon C.. 2006. Democratization and International Organizations. International Organization 60 (1):137–67.
McNamara, Kathleen, and Castro, Eduardo. 2003. The Diffusion of Central Bank Independence. Paper presented at the 99th Annual Meeting of the American Political Science Association, August, Philadelphia.
Moran, Michael. 1991. The Politics of the Financial Services Revolution: The USA, UK, and Japan. New York: St. Martin's Press.
Moravcsik, Andrew. 2000. The Origins of Human Rights Regimes: Democratic Delegation in Postwar Europe. International Organization 54 (2):217–52.
Newkirk, Thomas C., and Robertson, Melissa A.. 1998. Insider Trading—A U.S. Perspective. Paper presented at the 16th International Symposium on Economic Crime, September 19, Jesus College, Cambridge, U.K. Available at ⟨⟩. Accessed 1 December 2009.
Newman, Abraham L. 2008a. Building Transnational Civil Liberties: Transgovernmental Entrepreneurs and the European Data Privacy Directive. International Organization 62 (1):103–30.
Newman, Abraham L. 2008b. Protectors of Privacy: Regulating Personal Data in the Global Economy. Ithaca, N.Y.: Cornell University Press.
Padgett, John F., and Ansell, Christopher K.. 1993. Robust Action and the Rise of the Medici, 1400–34. American Journal of Sociology 98 (6):1259–319.
Porter, Tony. 2004. Globalization and Finance. Cambridge: Polity Press.
Posner, Elliot. 2009a. The Origins of Europe's New Stock Markets. Cambridge: Harvard University Press.
Posner, Elliot. 2009b. Making Rules for Global Finance: Transatlantic Regulatory Cooperation at the Turn of the Millennium. International Organization 63 (4):665–69.
PRS Group. 2008. International Country Risk Guide Researcher's Dataset. Political Risk Services Group. Available at ⟨⟩. Accessed 6 January 2010.
Raustiala, Kal. 2002. The Architecture of International Cooperation: Transgovernmental Networks and the Future of International Law. Virginia Journal of International Law 43:192.
Risse-Kappen, Thomas, ed. 1995. Bringing Transnational Relations Back: Non-State Actors, Domestic Structures, and International Relations. Cambridge: Cambridge University Press.
Securities and Exchange Commission. Various Years. United States. Foreign Companies Registered and Reporting with the US Securities and Exchange Commission. Available at ⟨⟩. Accessed 6 January 2010.
Simmons, Beth A. 2000. International Law and State Behavior: Commitment and Compliance in International Monetary Affairs. American Political Science Review 94 (4):819–36.
Simmons, Beth A. 2001. The International Politics of Harmonization: The Case of Capital Market Regulation. International Organization 55 (3):589620.
Simmons, Beth A., Dobbin, Frank, and Garrett, Geoffrey. 2006. Introduction: The International Diffusion of Liberalism. International Organization 60 (4):781810.
Simmons, Beth A., and Elkins, Zachary S.. 2004. The Globalization of Liberalization: Policy Diffusion in the International Political Economy. American Political Science Review 98 (1):171–89.
Singer, David Andrew. 2007. Regulating Capital: Setting Standards for the International Financial System. Ithaca, N.Y.: Cornell University Press.
Slaughter, Anne-Marie. 1997. The Real New World Order. Foreign Affairs 76 (5):183–97.
Slaughter, Anne-Marie. 2000. Governing the Global Economy Through Government Networks. In The Role of Law in International Politics: Essays in International Relations and International Law, edited by Byers, Michael, 177205. Oxford, England: Oxford University Press.
Slaughter, Anne-Marie. 2004. A New World Order. Princeton, N.J.: Princeton University Press.
Thurner, Paul W., and Martin, Binder. 2009. European Union Transgovernmental Networks: The Emergence of a New Political Space Beyond the Nation-State? European Journal of Political Research 48 (1):80106.
True, Jacqui, and Mintrom, Michael. 2001. Transnational Networks and Policy Diffusion: The Case of Gender Mainstreaming. International Studies Quarterly 45 (1):2757.
UNCTAD (United Nations Conference on Trade and Development). Various Years. Inward FDI Potential Index. Available at ⟨⟩. Accessed 6 January 2010.
Underhill, Geoffrey D. 1995. Keeping Governments Out of Politics: Transnational Securities Markets, Regulatory Cooperation, and Political Legitimacy. Review of International Studies 21 (3):251–78.
Vogel, David. 1995. Trading Up: Consumer and Environmental Regulation in a Global Economy. Cambridge, Mass.: Harvard University Press.
World Bank. 2009. World Development Indicators. Online Database. Available at ⟨,,contentMDK:20398986~menuPK:64133163~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html⟩. Accessed 6 January 2010.
Zaring, David. 1998. International Law by Other Means: The Twilight Existence of International Financial Regulatory Organizations. Texas International Law Journal 33:281330.

Related content

Powered by UNSILO

Transgovernmental Networks and Domestic Policy Convergence: Evidence from Insider Trading Regulation

  • David Bach (a1) and Abraham L. Newman (a2)


Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed.