You are not currently logged in.
Access JSTOR through your library or other institution:
If You Use a Screen ReaderThis content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Insider Trading and the Efficiency of Stock Prices
Michael J. Fishman and Kathleen M. Hagerty
The RAND Journal of Economics
Vol. 23, No. 1 (Spring, 1992), pp. 106-122
Stable URL: http://www.jstor.org/stable/2555435
Page Count: 17
You can always find the topics here!Topics: Insider trading, Price efficiency, Stock prices, Prices, Incumbents, Shareholders, Trade, Market prices, Securities markets, Signals
Were these topics helpful?See something inaccurate? Let us know!
Select the topics that are inaccurate.
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Preview not available
We analyze several aspects of the debate on insider trading regulations. Critics of such regulations cite various benefits of insider trading. One prominent argument is that insider trading leads to more informationally efficient stock prices. We show that under certain circumstances, insider trading leads to less efficient stock prices. This is because insider trading has two adverse effects on the competitiveness of the market: it deters other traders from acquiring information and trading, and it skews the distribution of information held by traders toward one trader. We also discuss whether shareholders of a firm have the incentive to restrict insider trading on their own.
The RAND Journal of Economics © 1992 RAND Corporation