Institutional investors strategically communicate their private information to sell side analysts to accelerate the incorporation of their information into prices, that’s according to a new white paper written by Nathan Swem as part of the Finance and Economics Discussion Series for the Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C.
The paper, titled “Information in Financial Markets: Who Gets It First?” considers the relationship between hedge funds, sell-side analysts, buy side analysts and the ordinary investor. By comparing trading patterns and research publication dates, the author is able to build up a picture of how these four parties interact and collaborate to achieve the best returns and greatest exposure.
