Alexandre Padilla looks at whether insider trading is good or bad. He defines insider trading as the use of nonpublic information in a securities transaction and goes on to explain that even when secret information is not disclosed, the actions of investors who have more knowledge about a company signal other participants in the market to either buy or sell stock in that company.
Through his research, Padilla is trying to determine whether allowing insider trading would help or hamper free markets. He draws a parallel between Hayek’s view of the importance of local knowledge in the allocation of scarce resources and the impact on capital markets of investors acting with insider knowledge.
Finally, Padilla discusses insider trading regulation and the idea that stock markets should be a level playing field where anyone can get rich. He explains that this egalitarian view is not realistic because not all investors will have the same knowledge or the time required to make good investments.
Insider Trading: Does It Help or Hamper the Markets? Alexandre Padilla
Universidad Francisco Marroquín Guatemala, February 10, 2012
A New Media - UFM production. Guatemala, May 2012 Camera: Jorge Samayoa; digital editing: Claudia de Obregón; index: Gabriela Valverde; synopsis and content reviser: Sofía Díaz; synopsis revisers: Daphne Ortiz, Jennifer Keller; publication: Claudia de Obregón, Sofía Díaz
This work is licensed under a Creative Commons 3.0 License Este trabajo ha sido registrado con una licencia Creative Commons 3.0
Alexandre Padilla is associate professor of economics at Metropolitan State College of Denver. His areas of interest include law and economics, organization economics, and applied microeconomics; health economics, austrian economics, and economic history. Padilla holds a BS, MA and Doctorate in Economics from Université de Droit, d'Economie, et des Sciences d'Aix-Marseille III; France.