Economics, Econometrics and Finance
3 years ago

Algorithmic trading impacts insider trading decisions and market information dissemination.

International Review of Finance
Insider trading and the algorithmic trading environment
Millicent Chang, John Gould, Yuyun Huang, Sirimon Treepongkaruna, Joey Yang

Paper Summary

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Algorithmic trading affects how corporate insiders decide to buy or sell stocks. It can lower returns from routine insider sales, but insiders can still make strategic trades without being affected. Insiders also release information to the market, countering the reduced information gathering caused by algorithmic trading. Insider trading remains important for providing fundamental information and helping set stock prices, especially in today's computerized financial markets.