Trading ahead of barbarians’ arrival at the gate: insider trading on noninside information

Georgy Chabakauri, Vyacheslav Fos and Wei Jiang

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Privately informed about firm fundamentals, corporate insiders detect activism-motivated trades better than other traders. This paper solves the model of this novel form of insider trading motivated by non-insider information and presents empirical evidence. Corporate insiders preserve their ownership (restraining from selling or buying more) before activist interventions go public to benefit from price appreciation and to defend their private benefits of control. Surveillance technology facilitates response to pre-disclosure activist trading, especially when positive information about firm fundamentals is absent, supporting the mechanism that insiders attribute order flows to activist interest when speculation on fundamentals can be ruled out.

Keywords: insider trading; activism; market surveillance (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2025-12-16
References: Add references at CitEc
Citations:

Published in Review of Finance, 16, December, 2025. ISSN: 1572-3097

Downloads: (external link)
http://eprints.lse.ac.uk/127189/ Open access version. (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:127189

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().