Information flows in trading networks

STEFAN J. HUBER; Edward M. Watts; Christina Zhu

doi:10.1016/j.jacceco.2026.101876

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Information flows in trading networks

STEFAN J. HUBER¹; Edward M. Watts^2,3; Christina Zhu¹

¹ University of Pennsylvania · ² Yale University · ³ European Corporate Governance Institute

Journal of Accounting and Economics 2026 open access

We study the informational value of trading networks in over-the-counter (OTC) markets. Using detailed transaction-level data from the corporate bond market, we show that investors with larger dealer networks make superior trading decisions before changes in credit fundamentals, resulting in better risk-adjusted performance. We trace these investors’ superior trading decisions to trading connections where dealers are most likely to have access to novel credit-relevant information, supporting the interpretation that these investors obtain private information through their trading networks. Collectively, our evidence highlights the importance of trading relationships for investors’ private information acquisition.

DOI: 10.1016/j.jacceco.2026.101876
Pages: 101876
Language: en
Export: BibTeX
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