Information Asymmetry and Insider Trading

@inproceedings{Wu2014InformationAA,
  title={Information Asymmetry and Insider Trading},
  author={Wei Wu},
  year={2014}
}
I investigate the causal impact of information asymmetry on insider trading by exploiting a quasi-experimental design: the brokerage closure-related terminations of analyst coverage, which exogenously increase the information asymmetry of the affected firms. Using a difference-indifferences approach, I find that after the terminations of analyst coverage, corporate insiders obtain significantly higher abnormal returns and enjoy larger abnormal profits. The magnitudes of the increase are large… CONTINUE READING

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