Insider Trading with Private Information and Moral Hazard

Posted: 20 Dec 2007

See all articles by Chris Yung

Chris Yung

University of Virginia - McIntire School of Commerce

Abstract

This paper studies the trading decisions of an insider who has both private information about firm value and actions that directly affect this value. An irrelevance result obtains. Contrary to the theme in some of the existing literature on corporate governance, I do not find that liquidity impairs effort provision. Increases in liquidity are shown to increase variance of effort while leaving the mean effort unchanged.

Keywords: Insider trading, monitoring, governance

JEL Classification: G14, G32, G34

Suggested Citation

Yung, Chris, Insider Trading with Private Information and Moral Hazard. Finance Research Letters, Vol. 2, No. 2, 2005. Available at SSRN: https://ssrn.com/abstract=1076544

Chris Yung (Contact Author)

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States
434-242-0836 (Phone)

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