Insider trading with different market structures

Daher, Wassim; Karam, Fida; Mirman, Leonard J.

doi:10.1016/j.iref.2012.01.008

Cited by 13 publications

(18 citation statements)

References 20 publications

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“…∂ < , therefore, we draw the conclusion that for 1 n > , the first derivative is always negative, thus the value of 1 G ′ will always decrease as the number of insiders n increases.…”

Section: Amount Of Insiders' Order Flowmentioning

confidence: 77%

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Information Revelation in an Insider Trading Model with More Informed Traders

Wang¹

2017

JAEF

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on modeling insider trading under Cournot duopoly competition, but focus on changes in the financial side by introducing more owners as insiders, all of whom possess the same inside information and can trade in the stock market. We find that in reality, the output of listed firm decreases but quantity produced by other firm increases, though total output becomes less. Market makers are less responsive to both signals from real and financial sides, but will set stock prices higher with zero signals. The manager and each owner will order fewer stocks in the financial side, but the total order flow still depends upon the realized values of inside information. As the number of insiders increases, the profits of the manager and each owner will decrease correspondingly, so does the variance of the observed inside information. If the number approaches infinity, then all insiders' profits will also reach zero, and at the same time, there is no variance for the inside information. That is to say, all inside information is revealed to the public so the stock market is perfectly efficient.

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“…∂ < , therefore, we draw the conclusion that for 1 n > , the first derivative is always negative, thus the value of 1 G ′ will always decrease as the number of insiders n increases.…”

Section: Amount Of Insiders' Order Flowmentioning

confidence: 77%

“…q ′ is the price of the real product. Y ′ is the aggregate quantity produced, while 1 y ′ and 2 y ′ are the corresponding outputs of the two firms, we have 1 2 Y y y ′ ′ ′ = + . With regard to the financial sector, firm 2 is privately owned and privately financed, while firm 1 is publicly owned.…”

Section: Introduction 2 the Modelmentioning

confidence: 99%

Information Revelation in an Insider Trading Model with More Informed Traders

Wang¹

2017

JAEF

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“…Before interpreting the results, let us highlight the relationship between our three models and Mirman (2000, 2002), Mirman (2006, 2007),Wang et al (2009) andDaher et al (2012). Recall that odel 1 studies product differentiation in the real sector together with a monopoly structure in the financial sector.Model 2 extends Model 1 to incorporate Cournot competition in the financial sector.…”

mentioning

confidence: 92%

“…The manager's profits may decrease or increase depending on the exogenous parameters of the model. Daher et al (2012) investigated the importance of the competition structure in the financial market modeled alone, on the dissemination of information. They start by a natural extension of Jain and Mirman (1999) to include Cournot duopoly in the financial market.…”

Section: Introductionmentioning

confidence: 99%

“…Without loss of generality and for the sake of simplicity, the inverse demand slope, b , used in the literature, is assumed to be equal to one in this paper 8. Note that Wang and Wang (2010) studied a Stackelberg competition in the real market while Karam and Daher (2011) studied a two-tier real market structure and thus extended Jain and Mirman (2000) in different directions.…”

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confidence: 99%

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Insider trading with product differentiation

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In this paper, we analyze the effect of Cournot competition with differentiated products on the real and financial decisions of a publiclyowned firm, with three different structures in the financial market: monopoly, duopoly and Stackelberg. We show that the degree of product differentiation does not affect the results found in the literature on insider trading, concerning the effect of the financial market structure on firms' outputs, the revelation of information and the insiders' orders. Besides, firms' output, the amount of information revealed in the stock price, the insiders' trading orders and the owners' profits are independent of the degree of product differentiation. The real market structure through the degree of product differentiation is found to determine the level of the compensation scheme earned by the manager, the market makers' response to the total order flow signal as well as the managers' profits. 1

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Insider trading with different risk attitudes

Daher

Aydilek

Saleeby³

2020

J Econ

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This paper investigates the effect of different risk attitudes on the financial decisions of two insiders trading in the stock market. We consider a static version of the Kyle (1985) model with two insiders. Insider 1 is risk neutral while insider 2 is risk averse with negative exponential utility. First, we prove the existence of a unique linear equilibrium. Second, we obtain somewhat surprising results on how the risk attitudes affect the market liquidity, the price efficiency, when we carry out a comparative static analysis with respect to Tighe (1989) and Holden and Subrahmanyam(1994) models.

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Insider trading with different market structures

Cited by 13 publications

References 20 publications

Information Revelation in an Insider Trading Model with More Informed Traders

Information Revelation in an Insider Trading Model with More Informed Traders

Insider trading with product differentiation

Insider trading with different risk attitudes

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