Public Disclosure by ‘Small’ Traders

We model strategic trading by a rent-seeking insider, who exchanges without being spotted, and propose a comprehensive theory of market non-anonymity. Several novel results are established. They depend on asset value proprieties, beliefs, inter-temporal choices, and investorsí characteristics. In equilibrium, under a regulation mandating public trade revelation, disclosures may shift prices. If they do, uninformed manipulations arise only in some instances. SpeciÖcally, insiders constrained on asset holdings earn more than they would without such a disclosure rule. Consequently, mandating disclosures is unnecessary, as informative trades will be revealed voluntarily. This result reveals a previously unexplored link to the literature on (uncertifed/non-factual) announcements.


Issue Date:
2012
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/270624
Language:
English
Total Pages:
49
JEL Codes:
D82; G12; G14; G38
Series Statement:
WERP 998




 Record created 2018-04-04, last modified 2020-10-28

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