Public Disclosure by ‘Small’ Traders

Luca Gelsomini
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Luca Gelsomini: IESEG School of Management

Working papers from National Bank of Serbia

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

Keywords: mandatory vs. voluntary public disclosure; securities regulation; insider trading; market manipulation (search for similar items in EconPapers)
JEL-codes: D82 G12 G14 G38 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2012-11
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Persistent link: https://EconPapers.repec.org/RePEc:nsb:wppnbs:25

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