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Information Sales and Insider Trading

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Author Info
Cespa, Giovanni

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Abstract

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. Similarly to a durable goods monopolist, a monopolistic analyst selling information intertemporally competes against themself. This forces them to partially relinquish control over the information flow to traders. Conversely, an insider solves the intertemporal competition problem through vertical integration, thus exerting a tighter control over the flow of information. 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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4667.

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Date of creation: Oct 2004
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Handle: RePEc:cpr:ceprdp:4667

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Related research
Keywords: analysts; durable goods monopolist; information sales; insider trading;

Find related papers by JEL classification:
G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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This page was last updated on 2009-11-25.

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