TY - JOUR
T1 - The incentive to sell financial market information
AU - Fishman, Michael J.
AU - Hagerty, Kathleen M.
PY - 1995
Y1 - 1995
N2 - 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. Journal of Economic Literature Classification Numbers: G10, D82.
AB - 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. Journal of Economic Literature Classification Numbers: G10, D82.
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U2 - 10.1006/jfin.1995.1005
DO - 10.1006/jfin.1995.1005
M3 - Article
AN - SCOPUS:58149321947
SN - 1042-9573
VL - 4
SP - 95
EP - 115
JO - Journal of Financial Intermediation
JF - Journal of Financial Intermediation
IS - 2
ER -