Note: what is wrong with insider dealing

Abstract

In this journal Harry McVea recently has asked ‘What's Wrong with Insider Dealing?’ One imagines that many readers will have thought the question rather supererogatory, but Mr McVea more than adequately shows that just this question is very live in many of the leading works on the economics of stock markets. One is here dealing with seminal works such as those of Easterbrook, Fischel, Hirshleifer and Manne which are identified with the discipline of financial economics as such. Mr McVea, in my opinion rightly, concludes that insider dealing is wrong, but does so in a way that I think is wrong headed, particularly in the way that one fears his conclusion will be interpreted by most readers of this journal. Though there is much that is admirable in Mr McVea's paper, his conclusion is uncompelling, and is so for a reason with which I think it important to take issue.