Firms Vs. Insiders As Traders Of Last Resort
The authors explore the role of corporate insiders vs. firms as traders of last resort. They develop a simple model of insider trading in which insiders provide price support, as well as liquidity, in security markets. Consistent with the model predictions they find that in the US markets insiders' trading activities have a clear impact on return distributions. Furthermore, they provide empirical evidence on insiders transactions and firm transactions affecting returns in a different manner.