The impact of public information on insider trading *
نویسنده
چکیده
We study the impact of public information on insider trading in the context of Kyle’s speculative market. The linear Nash equilibrium is characterized analytically. We find that public information is detrimental for the insider and beneficial for the liquidity traders. The insider puts a negative weight on the public information in formulating his optimal strategy. The equilibrium price becomes more informative when there exists public information. 2001 Elsevier Science B.V. All rights reserved.
منابع مشابه
When is public enforcement of insider trading regulations effective?
In this paper we investigate when public enforcement of insider trading regulations reduces the amount of insider trading. We model a game between a potentially self-interested regulator enforcing insider trading laws and a trader who may be trading on inside information. We show that equilibrium strategies exist where despite active enforcement all inside information is used. Furthermore, we f...
متن کاملInsider Trading Behavior and News Announcement: Evidence from the Stock Exchange of Thailand
The purpose of this paper is to examine insider trading behavior reaction to news announcement by using firms listed on the Stock Exchange of Thailand during 2000 to 2008. By employing event-study approach, the results show that the information contents are significant to insider purchases but not to insider sales. In other words, only insider purchases can create abnormal returns. Moreover, co...
متن کاملEthical norms of CFO insider trading
Insider trading encompasses the buying or selling of stocks based on non-public information about the securities in question. Engaging in insider trading is particularly unethical for a Chief Financial Officer (CFO) who holds a fiduciary responsibility to shareholders and also typically is ethically obligated by his or her professional responsibilities. Although the Securities and Exchange Comm...
متن کاملIntegrating a Systems Approach to Detect Risk of Insider Trading
Corporations have repeated reported incidents of misuse of material non-public information for illegal insider trading. Though information technologies are being inappropriately used to assist in these activities, creatively using emerging technologies and business process can also aid in preventing and detecting insider trading. This paper first discusses the issues relating to insider trading...
متن کاملWhat is Morally Right With Insider Trading
Insider trading per se is obtaining information from non-public sources—private acquaintances, friends, colleagues—and using it for purposes of enhancing one's financial advantage. As Vincent Barry explains, “Insider dealings refers to the ability of key employees to profit from knowledge or information that has not yet become public.” Sometimes such a practice can be conducted fraudulently, as...
متن کامل