Competitive Threats, Information Asymmetry and Insider Trading

@inproceedings{Novk2017CompetitiveTI,
  title={Competitive Threats, Information Asymmetry and Insider Trading},
  author={Jiř{\'i} Nov{\'a}k Pavel Nov{\'a}k},
  year={2017}
}
This paper provides evidence that intensified product market competition increases information asymmetry between corporate insiders and investors. I use volume and gains from insider trading as proxies for information asymmetry. I show that when a firm faces competitive threats insiders purchase and sell more stocks and their trading better predicts future stock returns and long-term profitability changes. These results hold for several alternative measures of competitive intensity and they are… CONTINUE READING

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