Informed Trader Competition

We identify a group of informed investor that buys before positive earnings announcements and sells before negative announcements. During eleven years of a sample from equity markets, these informed investors trade in competition with one another and profit from their trading. Theory predicts how these investors should impact markets and trade and we find support for some predictions, particularly when the signals of informed traders are correlated. However, we find that more competition between informed investors does not lead to more of their information entering into prices.