Information Sales and Insider Trading with Long-Lived Information
Fundamental information resembles in many respects a durable good. Hence, the effects of its incorporation into stock prices depend on who is the agent controlling its flow. Like a durable goods monopolist, a monopolistic analyst selling information intertemporally competes against herself. This forces her to partially relinquish control over the information flow to traders. Conversely, an insider solves the intertemporal competition problem through vertical integration, thus exerting tighter control over the information flow. Comparing market patterns I show that a dynamic market where information is provided by an analyst is "thicker" and "more informative" than one where an insider trades. Copyright 2008 by The American Finance Association.
Year of publication: |
2008
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Authors: | CESPA, GIOVANNI |
Published in: |
Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 63.2008, 2, p. 639-672
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Publisher: |
American Finance Association - AFA |
Saved in:
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