Inside Brokers

We identify the broker each corporate insider trades through, and show that analysts and mutual fund managers affiliated with such "inside brokers'" retain a substantial information advantage on the insider's firm, even after these trades are disclosed. Affiliated analysts issue more accurate earnings forecasts, and affiliated mutual funds trade the insider's stock much more profitably than their peers, following insider trades through their brokerage. Our results challenge the prevalent perception that information asymmetry arising from insider trading is acute only before trade disclosure, and suggest that brokers facilitating these trades are in a position to exploit this asymmetry