Some Remarks on Leland's Model of Insider Trading
AbstractThis paper shows that Leland's (1992) results on the positive effects of insider trading on investment are not robust to the introduction of noise in the insider's information. The paper then considers two variations of his model in which the insider is risk neutral (to ensure robustness), and the investment decision is prior to the placing of the stock in the market. It is shown that if insider trading takes place in the primary market, it has no effect on the level of investment, whereas if it takes place in the secondary market, it has a negative effect on investment. Copyright 1999 by The London School of Economics and Political Science
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Centro de Estudios Monetarios Y Financieros- in its series Papers with number 9425.
Length: 27 pages
Date of creation: 1994
Date of revision:
Contact details of provider:
Postal: Centro de Estudios Monetarios Y Financieros. Casado del Alisal, 5-28014 Madrid, Spain.
Web page: http://www.cemfi.es/
More information through EDIRC
INVESTMENTS; ECONOMIC MODELS;
Other versions of this item:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Dimitri Vayanos & Jiang Wang, 2012.
"Market Liquidity — Theory and Empirical Evidence,"
NBER Working Papers
18251, National Bureau of Economic Research, Inc.
- Medrano, Luis Angel & Vives, Xavier, 2002.
"Regulating Insider Trading when Investment Matters,"
CEPR Discussion Papers
3292, C.E.P.R. Discussion Papers.
- Luis Angel Medrano & Xavier Vives, 2004. "Regulating Insider Trading When Investment Matters," Review of Finance, Springer, vol. 8(2), pages 199-277.
- Etebari, Ahmad & Tourani-Rad, Alireza & Gilbert, Aaron, 2004. "Disclosure regulation and the profitability of insider trading: Evidence from New Zealand," Pacific-Basin Finance Journal, Elsevier, vol. 12(5), pages 479-502, November.
- Muendler, Marc-Andreas, 2008. "Risk-neutral investors do not acquire information," Finance Research Letters, Elsevier, vol. 5(3), pages 156-161, September.
- Chi-Wen Lee & Zemin Lu, 2008. "Trading on inside information when there may be tippees," Review of Quantitative Finance and Accounting, Springer, vol. 31(3), pages 241-260, October.
- Bhattacharya, Sudipto & Nicodano, Giovanna, 1999. "Insider Trading, Investment and Liquidity," CEPR Discussion Papers 2251, C.E.P.R. Discussion Papers.
- Liang, Woan-lih & Lin, Hsiou-wei W. & Syu, Yir-Jung, 2010. "Precision of Investor Information and Financial Disclosure," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 627-632, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If references are entirely missing, you can add them using this form.