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Government ownership, informed trading, and private information

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  • Borisova, Ginka
  • Yadav, Pradeep K.

Abstract

We investigate the nature and extent of information asymmetry among traders in companies with government ownership. Consistent with a less transparent information environment, we find relatively less informed trading in the shares of firms with government presence, and specifically, fewer informed trades related to the skilled analysis of public information. At the same time, we also find that firms with government presence have a significantly higher proportion of informed trading that arises from explicitly private information, consistent with the literature on the self-serving influence of government stakeholders not necessarily committed to maximizing firm value.

Suggested Citation

  • Borisova, Ginka & Yadav, Pradeep K., 2015. "Government ownership, informed trading, and private information," Journal of Corporate Finance, Elsevier, vol. 33(C), pages 196-211.
    • Handle: RePEc:eee:corfin:v:33:y:2015:i:c:p:196-211
    DOI: 10.1016/j.jcorpfin.2015.07.001
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    3. Cosmin Octavian Cepoi & Victor Dragotă & Ruxandra Trifan & Andreea Iordache, 2023. "Probability of informed trading during the COVID-19 pandemic: the case of the Romanian stock market," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-27, December.

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    More about this item

    Keywords

    Government ownership; Privatization; Information asymmetry; Informed trading; Private information;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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