Strategic trading by insiders in the presence of institutional investors

Lai T. Hoang*, Marvin Wee, Joey Wenling Yang

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    3 Citations (Scopus)

    Abstract

    We examine how competition to trade on information with institutional traders affects insider trading. We find insiders complete their trades quicker when trading on the same side as institutions, and this effect is more pronounced when insiders are more informed. These findings support information-based models, suggesting that insiders accelerate their trading as institutional traders are likely to become privy to the private information and compete with them. We identify two possible channels by which institutional investors acquire private information: when insiders and institutional traders share the same broker, and when firms’ headquarters are in the same city as institutional traders.

    Original languageEnglish
    Article number100802
    Number of pages23
    JournalJournal of Financial Markets
    Volume64
    Issue number2023
    DOIs
    Publication statusPublished - Jun 2023

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