Should Insider Trading be Prohibited when Share Repurchases are Allowed? Journal Article uri icon

Overview

abstract

  • Abstract; This paper considers share repurchases as the way long-term shareholders preserve their ability to use corporate information for speculative purposes when insider trading regulation is enforced. This use of corporate information increases the adverse selection losses of short-term shareholders. Thus, buy-back programs reduce their incentive to invest in stocks that back the most productive technology, leading to a socially inefficient equilibrium. It follows that insider trading should not be banned when share repurchases are allowed. More generally, the paper argues that the regulation of insider trading and repurchases can not be considered in isolation, and analyzes their interplay.

publication date

  • January 1, 2008

has restriction

  • bronze

Date in CU Experts

  • October 14, 2020 9:24 AM

Full Author List

  • Buffa AM; Nicodano G

author count

  • 2

Other Profiles

International Standard Serial Number (ISSN)

  • 1572-3097

Electronic International Standard Serial Number (EISSN)

  • 1573-692X

Additional Document Info

start page

  • 735

end page

  • 765

volume

  • 12

issue

  • 4