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| Author: | Repullo, R. |
| Title: | Some remarks on Leland's model of insider trading |
| Journal: | Economic Geography
1999 : AUG, VOL. 66:263, p. 359-374 |
| Index terms: | Capital investment Investment Insider trading Stock exchanges Financial risk |
| Language: | eng |
| Abstract: | This paper shows that Leland's (1992) results on the positive effects of insideer trading on investment are not robust to the to the introduction of noise in the insider's information. It considers two variations of his model in which the insider is risk neutral (to ensure robustness), and the investment decision is prior to the placing of the stock in the market. It is shown that if insider trading takes place in the secondary market, it has a negative effect on investment. |
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