Inside Brokers​

We identify the broker each corporate insider trades through, and show that analysts and mutual fund managers affiliated with such ”inside brokers'' retain a substantial information advantage on the insider's firm, even after these trades are disclosed. Affiliated analysts issue more accurate earnings forecasts, and affiliated mutual funds trade the insider's stock much more profitably than their peers, following insider trades through their brokerage. Our results challenge the prevalent perception that information asymmetry arising from insider trading is acute only before trade disclosure, and suggest that brokers facilitating these trades are in the position to exploit this asymmetry.

Dr Rik Sen

Rik Sen is an Associate Professor in the School of Banking and Finance at the University of New South Wales in Sydney, Australia. Before joining UNSW, he was an assistant professor of finance at the Hong Kong University of Science of Technology. His research is primarily in corporate finance, with specific focus on corporate governance and compensation. He has taught courses in undergraduate programs, MBA, other Masters programs, and doctoral program. He has supervised Ph.D. students and is regularly invited to present his work at international conferences. Rik received his Ph.D. from New York University’s Stern School of Business. He has published in the Journal of Financial Economics, Review of Financial Studies, and Management Science. He has won several competitive research grants as well as an award for the best paper in corporate finance at the Northern Financial Association conference.

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