Abstract

http://ssrn.com/abstract=1133084
 
 

References (43)



 
 

Citations (9)



 


 



Do Financial Analysts Restrain Insiders' Informational Advantage?


Andrew Ellul


Indiana University - Kelley School of Business - Department of Finance

Marios A. Panayides


University of Pittsburgh - Katz Graduate School of Business

January 23, 2016


Abstract:     
By collecting and disseminating price sensitive information, financial analysts should reduce firm insiders’ informational advantage with a consequent impact on trading dynamics and market quality. We empirically examine the impact of complete analysts’ coverage termination on stocks’ liquidity, price discovery and profitability of insider trading. Termination leads to deteriorating liquidity and price efficiency, more informed trading, and higher profitability of insider trades. The magnitude of these effects depends on the strength of insiders’ ownership and on management’s decision whether to improve the firm’s information environment after coverage termination. Institutional investors alleviate, but do not eliminate, the negative effects of termination.

Number of Pages in PDF File: 68

Keywords: Sell-side Research, Insiders, Insider Trading, Information Asymmetries, Liquidity

JEL Classification: D14, G24, D82


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Date posted: May 17, 2008 ; Last revised: January 25, 2016

Suggested Citation

Ellul, Andrew and Panayides, Marios A., Do Financial Analysts Restrain Insiders' Informational Advantage? (January 23, 2016). Available at SSRN: http://ssrn.com/abstract=1133084 or http://dx.doi.org/10.2139/ssrn.1133084

Contact Information

Andrew Ellul (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States

Marios A. Panayides
University of Pittsburgh - Katz Graduate School of Business ( email )
372 Mervis Hall
Pittsburgh, PA 15260
United States
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