Government ownership, informed trading, and private information

- We examine informed trading in companies with and without government ownership.
- Informed trading can be based on processed public or explicitly private information.
- Government-owned firms have less informed trading based on public information.
- Government-owned firms have a higher proportion of private information-based trading.

We investigate the nature and extent of information asymmetry among traders in companies with government ownership. Consistent with a less transparent information environment, we find relatively less informed trading in the shares of firms with government presence, and specifically, fewer informed trades related to the skilled analysis of public information. At the same time, we also find that firms with government presence have a significantly higher proportion of informed trading that arises from explicitly private information, consistent with the literature on the self-serving influence of government stakeholders not necessarily committed to maximizing firm value.