{'fraction_non_alphanumeric': 0.012485811577752554, 'fraction_numerical': 0.0, 'mean_word_length': 6.229508196721311, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
Competitive Threats, Information Asymmetry and Insider Trading

This paper provides evidence that intensified product market competition increases information asymmetry between corporate insiders and investors. When competitive pressure intensifies future performance becomes dependent on a firm’s success in the competitive process. Firm performance turns more idiosyncratic increasing forecasting relevance of firm-specific information. As firm-specific information is better known to insiders their information advantage increases. I show that when competition intensifies insiders purchase and sell larger volumes of equity and their trading better predicts future stock returns and long-term profitability changes. These results hold for several alternative measures of competitive intensity and they are related to the degree of restrictiveness of insider trading regulation.