PAM_334_Fall_2008_Lecture_18 - PAM3340 Lecture18 Agenda:...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
PAM 3340 Lecture 18 Agenda: Costs/benefits of I.T. Coasian analysis of I.T. I.T. cases Executive compensation
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Defining Insider Trading Consider alternative definitions of IT Parties “better informed” about a stock  than others?  
Background image of page 2
Defining Insider Trading  (con’t) Parties with “unequal access” to  information? Does a stock analyst have unequal  access?
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Defining Insider Trading  (con’t) Property Rights Definition of IT: There exist  property rights to  information  within the firm  The firm can define what info can be  traded on and what cannot (i.e. what  remains in the firm) via  contracts Think of allocating prop. rts by contract
Background image of page 4
Defining Insider Trading  (con’t) Application of property rights definition:  Parties  lawfully in possession of the information  can trade on it,  i.e. if they own the information  Parties not lawfully in possession of information  cannot trade on it or pass it on   (like theft) To understand IT, focus on property rights to  information  (can borrow from patents, etc.)
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Property Rights Definition of IT How can property rights to information  be established?
Background image of page 6
Costs and Benefits of Having  Insiders Trade Gauge costs and benefits by what  increases shareholder value: What  effect does IT have on shareholder's  wealth?  Do restrictions on it increase or  decrease shareholder value?
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Benefits of Having Insiders  Trade (con’t) If there were no transactions costs, then 
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 24

PAM_334_Fall_2008_Lecture_18 - PAM3340 Lecture18 Agenda:...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online