More Insiders , More Insider Trading : Evidence from Private Equity Buyouts Viral

@inproceedings{Acharya2009MoreI,
  title={More Insiders , More Insider Trading : Evidence from Private Equity Buyouts Viral},
  author={Viral Acharya and Timothy C. Johnson},
  year={2009}
}
This paper studies how insider trading intensity is affected by the joint effects of competition and regulation. Prior theoretical research has found that, in the absence of regulation, more insiders leads to more insider trading. We show that optimal regulation, however, features detection and punishment policies that get stricter as the number of insiders increases, giving rise to lower insider trading in equilibrium. We construct measures of the likelihood of insider activity prior to bid… CONTINUE READING

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