Do insiders crowd out analysts?
Both insiders and analysts are involved in the collection and dissemination of information to the market, roles which impact heavily on price efficiency and resource allocation. The differences between the two groups, however, result in a competitive relationship with analysts at a disadvantage as they face greater costs associated with information gathering. As a result they may choose not to participate in a onesided competition. We employ transaction data to examine the impact of firm-year aggregate insider trading intensity on the level of analyst following. We find a negative relationship between insider trading intensity and analyst coverage. This result was driven by large blockholders suggesting that analysts are attracted to higher levels of information asymmetry from which they profit.