Public Disclosure by ‘Small’ Traders

Luca Gelsomini

No 270624, Economic Research Papers from University of Warwick - Department of Economics

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 investorsí characteristics. In equilibrium, under a regulation mandating public trade revelation, disclosures may shift prices. If they do, uninformed manipulations arise only in some instances. SpeciÖcally, 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 (uncertifed/non-factual) announcements.

Keywords: Financial Economics; Marketing (search for similar items in EconPapers)
Pages: 49
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:270624

DOI: 10.22004/ag.econ.270624

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