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Public Disclosure by ‘Small’ Traders

Author

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  • Gelsomini, Luca

    (IESEG School of Management (LEM CNRS); CRETA, University of Warwick)

Abstract

We model strategic trading by a rent-seeking insider, who exchanges without being spotted, and propose a comprehensive theory of market non-anonymity. Several novel results are established. They depend on asset value proprieties, beliefs, inter-temporal choices, and investors’ characteristics. In equilibrium, under a regulation mandating public trade revelation, disclosures may shift prices. If they do, uninformed manipulations arise only in some instances. Speci…cally, insiders constrained on asset holdings earn more than they would without such a disclosure rule. Consequently, mandating disclosures is unnecessary, as informative trades will be revealed voluntarily. This result reveals a previously unexplored link to the literature on (uncerti…ed/non-factual)announcements. JEL classification: D82 ;G12 ;G14 ; G38

Suggested Citation

  • Gelsomini, Luca, 2012. "Public Disclosure by ‘Small’ Traders," The Warwick Economics Research Paper Series (TWERPS) 998, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:998
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    More about this item

    Keywords

    Mandatory vs. voluntary public disclosure ; securities regulation ; insider trading ; market manipulation.;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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