Insider Trading with Costly Information Acquisition

Revision of study 1992:11

Posted: 3 Jul 1998

See all articles by Lars Goren Larsson

Lars Goren Larsson

Gothenburg University

Clas Wihlborg

Chapman University; University West

Date Written: August 1994

Abstract

A simple model with a riskless and a risky asset is used to analyze how the presence of insiders influence investor's utility. The incentive for outside investors to acquire information is derived. Equilibrium pricing of the risky asset depends on the share of investors being insiders as well as the endogenous acquisition by outsiders. Outsiders' information acquisition and insiders' information may be complements or substitutes from the point of view of information acquisition depending on the kind of information outsiders acquire.

JEL Classification: G12

Suggested Citation

Larsson, Lars Goren and Wihlborg, Clas, Insider Trading with Costly Information Acquisition (August 1994). Revision of study 1992:11, Available at SSRN: https://ssrn.com/abstract=7181

Lars Goren Larsson (Contact Author)

Gothenburg University ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden
(+46) 31 773 1369 (Phone)
(+46) 31 773 1043 (Fax)

Clas Wihlborg

Chapman University ( email )

333 N. Glassell
Orange, CA 92866
United States
+17147447630 (Phone)

University West ( email )

Trollhättan, 46186
Sweden

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