Insider Trading, Competition, and Real Activities Manipulation
研究经理人预期内幕交易机会时如何操纵企业实际活动，发现过度生产会降低利润但提高消费者剩余，竞争程度、经理持股和成本信息精度可缓解此行为。
We consider a setting where managers manipulate the firms’ real activities in anticipation of insider trading opportunities. Managers choose strictly higher production quantities than the quantities chosen absent insider trading, implying lower firm profit but higher consumer surplus. Through comparative statics, we show the overproduction is mitigated by the degree of competition in the industry, the manager’s current equity stake in the firm, and the precision of cost information. We also analyze the effects of insider trading in several extensions including asymmetric ownership structure, potential horizontal merger, and common market maker. This paper was accepted by Shiva Rajgopal, accounting.