Review of Finance Vol. 30 No. 3 2026

Trading ahead of barbarians’ arrival at the gate: insider trading on noninside information

Georgy Chabakauri¹; Vyacheslav Fos²; Wei Jiang³

¹ London School of Economics and Political Science Department of Finance, ; London, · ² Carroll School of Management, Boston College Seidner Department of Finance, ; Chestnut Hill, · ³ Emory University Goizueta Business School, ; Altanta,

Abstract

Privately informed about firm fundamentals, corporate insiders detect activism-motivated trades better than other traders. This article solves the model of this novel form of insider trading motivated by noninsider information and presents empirical evidence. Corporate insiders preserve their ownership (restraining from selling or buying more) before activist interventions go public to benefit from price appreciation and to defend their private benefits of control. Surveillance technology facilitates response to predisclosure activist trading, especially when positive information about firm fundamentals is absent, supporting the mechanism that insiders attribute order flows to activist interest when speculation on fundamentals can be ruled out.

DOI

10.1093/rof/rfaf065

Volume

30

Issue

3

Pages

921-948

Language

en

Sources

openalex crossref

Cite

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