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Research Details
The Incentive to Sell Financial Market Information, Journal of Financial Intermediation
Abstract
Investment advisory firms and brokerage firms hire analysts to uncover profitable securities investment opportunities. Then these firms sell the information (either directly or indirectly) to others. Why? Given that the information has value, why do these firms not keep the information to themselves and trade solely for their own accounts? Because of competition, information is more valuable when fewer people trade on the information. This paper shows that selling information is a strategic response by competing informed traders. Specifically, it is a means for informed traders to commit to trade aggressively, thereby inducing other informed traders to trade less aggressively.
Type
Article
Author(s)
Michael J. Fishman, Kathleen Hagerty
Date Published
1995
Citations
Fishman, Michael J., and Kathleen Hagerty. 1995. The Incentive to Sell Financial Market Information. Journal of Financial Intermediation.(2): 95-115.