Where do informed traders trade? Evidence from corporate earnings

Abstract

This thesis examines informed trading activity in opaque markets around corporate earnings releases. I find that prior to surprise earnings news, informed traders use opaque markets to conceal their informational advantage. However, informed trading is only prominent in one particular market that allows access to any market participant. Other opaque markets that restrict participation do not exhibit any evidence of informed trading. Since opaque markets are primarily intended for uninformed trading, my results have important implications for market design.