Insider trading, the trading of shares on the basis of non-public or privileged information, has only a marginal effect on the overall performance of stock markets, it is argued. And bearing in mind the tactics regularly used by big investment firms to artificially drive share prices, the contribution of insider trading to market distortions is small.
Some even believe it can have a positive effect on market efficiency by helping maintain the 'real' value of the market. Investment professionals are in the information business and are constantly seeking out new information - some of which may be non-public. But participants expressed different views as to what constitutes market-sensitive information.
Source: Inside out
Andrew P Kakabadse, Nada K Kakabadse and Antje Kaspurz
Business Strategy Review, Vol 17 Issue 1, spring 2006
Review by Steve Lodge