Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 18, 2019 erstellt
Description:
This study examines the use of insider trading information by hedge funds. We find that hedge funds tend to trade in the same direction as insiders when insider trading is likely driven by information, but do not respond to likely liquidity-driven insider trades. This finding is consistent with hedge funds being able to decipher insider trading information and trade accordingly. In contrast, mutual funds, pension funds and other institutional investors (mostly banks and insurance companies) are more likely to trade in the opposite direction as insiders, acting as liquidity providers regardless of the trading motives of insiders. Further, there is evidence that a hedge fund's ability to exploit insider trading information helps improve its performance. Our study contributes to the literature on hedge fund skills by showing their ability to exploit insider information and linking such ability to performance