Analysis of the Behavior of Insider Traders Who Disclose Information to External Traders
This paper establishes an insider trading model under market supervision, which includes four types of trading entities: an insider trader, <i>n</i> external traders, noise traders, and market makers. The insider trader voluntarily discloses information to the external traders during the...
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2025-06-01
|
| Series: | International Journal of Financial Studies |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2227-7072/13/2/112 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | This paper establishes an insider trading model under market supervision, which includes four types of trading entities: an insider trader, <i>n</i> external traders, noise traders, and market makers. The insider trader voluntarily discloses information to the external traders during the trading process. The research findings are as follows: (1) strengthening market supervision can significantly reduce the insider’s expected profit and increase the external traders’ expected profits; (2) the optimal market supervision strategy is closely related to the number of external traders; (3) the insider trader tends to disclose low-precision information to maximize their profits; (4) the precision of information disclosed by the insider trader and the intensity of market supervision affect price efficiency and the amount of residual information. The research results provide a basis for how the insider trader discloses information to external traders in market supervision and offer a reference for regulatory authorities to formulate differentiated supervision strategies. |
|---|---|
| ISSN: | 2227-7072 |