ABSTRACT
A small number of recently published articles have come up with a new line of argument that emphasizes the distinction between positive and negative information with a focus on the distribution of information rather than on the production of it. Aer the fall of Enron, Manne (2005) was one of the rst to explain how insider trading would have prevented managerial misconduct and other corporate fraud. If insiders were allowed to trade on concealed information, the information would have become public. Even though Manne did not explicitly refer to negative versus positive information, he clearly put the insider trading debate in the light of the recent scandals. Kobayashi and Ribstein (2006) and myself (Grechenig 2006) highlighted the positive eects of insider trading on negative information. Whereas Kobayashi and Ribstein focused on outsiders with private information, I analyzed typical insiders and made the distinction between positive and negative information explicit. Macey (2007) applied these insights to the discussion on whistleblowing, arguing that insider trading on negative information has advantages over conventionally rewarding whistleblowers for uncovering information.
