Trading ahead of barbarians’ arrival at the gate: insider trading on noninside information

Chabakauri, Georgy ORCID: 0009-0002-7980-269X, Fos, Vyacheslav and Jiang, Wei (2025) Trading ahead of barbarians’ arrival at the gate: insider trading on noninside information. Review of Finance. ISSN 1572-3097

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Abstract

Privately informed about firm fundamentals, corporate insiders detect activism-motivated trades better than other traders. This paper solves the model of this novel form of insider trading motivated by non-insider information and presents empirical evidence. Corporate insiders preserve their ownership (restraining from selling or buying more) before activist interventions go public to benefit from price appreciation and to defend their private benefits of control. Surveillance technology facilitates response to pre-disclosure activist trading, especially when positive information about firm fundamentals is absent, supporting the mechanism that insiders attribute order flows to activist interest when speculation on fundamentals can be ruled out.

Item Type:	Article
Additional Information:	© 2025 The Authors
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance
Date Deposited:	06 Feb 2025 09:54
Last Modified:	09 Jan 2026 10:06
URI:	http://eprints.lse.ac.uk/id/eprint/127189

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