Contractual restrictions on insider trading: a welfare analysis

被引：0
|
作者：
Antonio E. Bernardo
机构：
[1] Anderson Graduate School of Management,
[2] U.C.L.A. 110 Westwood Plaza Box 951481,undefined
[3] Los Angeles,undefined
[4] CA 90095-1481,undefined
[5] USA (e-mail: abernard@anderson.ucla.edu) ,undefined
来源：
Economic Theory | 2001年 / 18卷
关键词：
Keywords and Phrases: Insider trading, Rational expectations equilibrium, Asymmetric information, Contracts, Investment policy.; JEL Classification Numbers: C63, D82, G10, G18.;
D O I：
暂无
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学科分类号：
摘要：
This paper analyzes the welfare effects of permitting firms to negotiate contractually the right to allow corporate insiders to trade shares in the firm on private information. A computational framework is employed to (i) analyze formally the effects of insider trading on managerial investment choice, the informational efficiency of stock prices, and the welfare of all investor types; and (ii) examine the effectiveness of various compensation schemes (such as stock and insider trading rights) to mitigate conflicts of interest between managers and shareholders. I show that shareholders will typically choose not to grant insider trading rights to managers. This decision is socially optimal.
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页码：7 / 35
页数：28
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