New Essays on Insider Trading

3 April 2008 at 11:19 am 2 comments

| Peter Klein |

Steve Bainbridge reviews the history of insider-trading litigation and characterizes Henry Manne’s classic contribution.

Here are Manne’s own reflections (in 2005) on the influence of his work from the 1960s. The new paper, “Insider Trading: Hayek, Virtual Markets, and the Dog that Did Not Bark,” suggests that the activities of insider traders, in so far as they help move stock prices toward their “true” (full-information) values, provides valuable information to corporate decision-makers facing the Hayekian knowledge problem.

Entry filed under: - Klein -, Corporate Governance, Law and Economics.

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2 Comments Add your own

  • 1. Jason Kettinger  |  9 April 2008 at 2:48 pm

    Peter,

    Is insider trading the expression of implicit knowledge? And are you saying (mixed with words I don’t understand) it is good?

  • 2. Peter Klein  |  9 April 2008 at 9:32 pm

    I’m not saying anything, but Manne is saying in this article that allowing people to trade on inside information is good for market efficiency. Insiders may possess information that even top corporate decision-makers lack, and the movement of prices resulting from trades by these insiders may provide executives with valuable information.

    In Manne’s work from the 1960s he argued that allowing employees to trade on inside information can be an efficient form of compensation.

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