 Strategic information leakage with market supervisionNingwei Li, Zhihua Li, Hong Liu and Qingshan Yang The North American Journal of Economics and Finance, 2024, vol. 73, issue C Abstract: Regulatory regime aims to prevent insider information from manipulating market and ensure fair competition among investors. This paper constructs a regulatory model for insider trading in the market and explores how regulatory oversight influences the decision of the insider who voluntarily leaks information to market makers. The conclusion is that regulatory intervention suppresses the insider from exploiting shared information with outsiders, reducing price efficiency. Moreover, an increase of supervision will further encourage the insider to leak more information until the public information is completely released to market makers. Furthermore, when there is an outsider, the insider may choose not to disclose information to market makers, regardless of the implementation of regulatory policies; when there are multiple outsiders in the market and strict regulatory frameworks, the insider is motivated to provide market makers with more precise information. The results provide a theoretical basis for the insider to release information to underwriters in a regulated market. Keywords: Insider trading behavior; Information leakage; The optimal regulation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:73:y:2024:i:c:s1062940824001050 DOI: 10.1016/j.najef.2024.102180 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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