Insider Trading Along Supply Chain Network in Credit Derivatives

Posted: 31 Jan 2018

See all articles by Nan Hu

Nan Hu

Stevens Institute of Technology - School of Business

Peng Liang

Independent

Date Written: January 23, 2018

Abstract

In this paper, using news reflected in the stock market as a benchmark for the public information of suppliers, we find significant incremental information revelation in the credit default swap market of the customers. The information revelation is more significant during the periods when either suppliers or customers announce their earnings. Our results are consistent with the arguments 1) when facing suppliers’ earnings announcements, investors actively seek insider information revealed by customers’ CDS trading; or 2) when customers announce their earnings, the insider information revealed by customers’ CDS trading is pushed to the equity investors of the suppliers.

Keywords: Supply Chain, Operational Risk, Credit Default Swap (CDS), Information Asymmetry

JEL Classification: G3

Suggested Citation

Hu, Nan and Liang, Peng, Insider Trading Along Supply Chain Network in Credit Derivatives (January 23, 2018). Available at SSRN: https://ssrn.com/abstract=3108297

Nan Hu (Contact Author)

Stevens Institute of Technology - School of Business ( email )

Hoboken, NJ 07030
United States

Peng Liang

Independent ( email )

No Address Available

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