Equivocable Insiders
Insider trading – the use of inside information about a corporation – to trade its stock to personal advantage is a major concern of regulators everywhere. Laws against this abound, and the penalties if found out are often significant: jail time awaits the unwary insider.
Of course, the ultimate insiders are company executives and there have been a lot of studies trying to figure out whether directors are any good at exploiting internal information. The evidence, such as it is, is equivocal and the reason seems to be that these privileged insiders don’t know as much as we think they do. Meanwhile insider trader laws are actually damaging the ability of markets to set prices efficiently: as ever, unintended consequences abound.
Insider trading – the use of inside information about a corporation – to trade its stock to personal advantage is a major concern of regulators everywhere. Laws against this abound, and the penalties if found out are often significant: jail time awaits the unwary insider.
Of course, the ultimate insiders are company executives and there have been a lot of studies trying to figure out whether directors are any good at exploiting internal information. The evidence, such as it is, is equivocal and the reason seems to be that these privileged insiders don’t know as much as we think they do. Meanwhile insider trader laws are actually damaging the ability of markets to set prices efficiently: as ever, unintended consequences abound.