Some Remarks on Leland's Model of Insider Trading

This paper begins by noting that Leland's (1992) results on the effects of insider trading are not robust to the introduction of some noise in the insider's information. the paper then considers two robust variations of his model in which insider trading takes place in either the primary or the second market. It is shown that if insider trading takes place in either the primary market, it has no effect on the level investment, whereas if it takes place in the secondary market, it has a negative effect on investment. 

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