Economics, Econometrics and Finance
4 years ago

Insider Trading Boosts Profits for Insiders, Leaves Outsiders Vulnerable.

2 views
Annals of economics and finance
The Impact of Insider Trading on the Secondary Market with Order-Driven System
Xianfeng Jiang, Yongdong Shi

Paper Summary

Insider trading affects the stock market by not changing the average price and creating a link between current and future prices. The volatility and liquidity of the market can go in different directions with insider trading. Prices can still be efficient in certain cases, whether insider trading occurs or not. Insiders benefit from insider trading, while outsiders and regular traders may either gain or lose from it.

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