Stackelberg real-leader in an insider trading model
AbstractPurpose – The purpose of this paper is to extend the work of earlier researches relating to insider trading issues in the stock market under a Cournot-Stackelberg duopoly. Design/methodology/approach – This paper models that the competition among the insiders in the real market be Stackelberg, which reflects that for all outside and inside reasons, the position and influence of a firm may become the leader or the follower as time goes by. Findings – The paper demonstrates that when the listed company with insiders becomes the leader in the industry, the reaction functions of insiders will change as well as the parameters of the market, to signal from real and financial sides, but the amount traded by insiders remains the same; so does the degree of information revelation. In addition, for the information revealed to the public, the stock price reveals more information with Stackelberg real-leader model than that of the Stackelberg financial-leader model. Originality/value – The main contribution of this paper is that market makers can very well observe signals from the real side, and bringing a signal from the real side can help the stock market reveal more information, but once the signal is introduced, it may not further enhance market efficiency.
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Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Studies in Economics and Finance.
Volume (Year): 27 (2010)
Issue (Month): 1 (March)
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Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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