Publication Type

Working Paper

Publication Date

10-2017

Abstract

We identify the broker each corporate insider trades through, and show that analystsand mutual fund managers affiliated with such “inside brokers” retain a substantialinformation advantage on the insider’s firm, even after these trades are disclosed.Affiliated analysts issue 10–20% more accurate earnings forecasts, and affiliated fundstrade the insider’s stock much more profitably than their peers, following insider tradesthrough their brokerage. Our results challenge the prevalent perception that informationasymmetry arising from insider trading is acute only before trade disclosure, andsuggest that brokers facilitating these trades are in a unique position to exploit suchan asymmetry.

Keywords

Insiders, Brokers, Analysts, Mutual Funds, Information Transmission

Discipline

Corporate Finance | Management Information Systems

Research Areas

Finance

First Page

1

Last Page

61

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

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