Information Sales and Insider Trading with Long-lived Information

Giovanni Cespa

No 613, Working Papers from Queen Mary University of London, School of Economics and Finance

Abstract: Fundamental information resembles in many respects a durable good. Hence, the effects of its incorporation into stock prices depend on who is the agent controlling its flow. Like a durable goods monopolist, a monopolistic analyst selling information intertemporally competes against herself. This forces her to partially relinquish control over the information flow to traders. Conversely, an insider solves the intertemporal competition problem through vertical integration, thus exerting tighter control over the information flow. Comparing market patterns I show that a dynamic market where information is provided by an analyst is thicker and more informative than one where an insider trades.

Keywords: Information sales; Analysts; Insider trading; Durable goods monopolist (search for similar items in EconPapers)
JEL-codes: G10 G12 G14 L12 (search for similar items in EconPapers)
Date: 2007-10-01
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Information Sales and Insider Trading with Long‐Lived Information (2008)
Working Paper: Information Sales and Insider Trading with Long-lived Information (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:qmw:qmwecw:613

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