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Precision of Investor Information and Financial Disclosure

Author

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  • Liang, Woan-lih
  • Lin, Hsiou-wei W.
  • Syu, Yir-Jung

Abstract

This study investigates a situation in which the precision of an inside investor's private signal increases with the size of his shareholding. Intuitively, an insider with a more informative signal regarding the prospects of a project may be expected to involve himself in larger information-motivated transactions and enjoy greater profits. We suggest that such an advantage, nevertheless, may be alleviated or even eliminated when the financial statements accompanied by disclosure of either his shareholdings or the distribution of block shareholdings reveal the extent to which the insider is informed. The market may optimize its reaction to the order flows accordingly.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:reveco:v:19:y:2010:i:4:p:627-632
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    References listed on IDEAS

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    Cited by:

    1. Wassim Daher & Harun Aydilek & Fida Karam & Asiye Aydilek, 2014. "Insider trading with product differentiation," Journal of Economics, Springer, vol. 111(2), pages 173-201, March.
    2. Daher, Wassim & Karam, Fida & Mirman, Leonard J., 2012. "Insider trading with different market structures," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 143-154.
    3. Grégoire, Philippe & Huang, Hui, 2012. "Information disclosure with leakages," Economic Modelling, Elsevier, vol. 29(5), pages 2005-2010.
    4. Li, Yanqiong & He, Jie & Xiao, Min, 2019. "Risk disclosure in annual reports and corporate investment efficiency," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 138-151.
    5. Wassim Daher & Harun Aydilek & Elias G. Saleeby, 2020. "Insider trading with different risk attitudes," Journal of Economics, Springer, vol. 131(2), pages 123-147, October.

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