Information flows in trading networks
Abstract
We study the informational value of trading networks in over-the-counter (OTC) markets. Using detailed transaction-level data from the corporate bond market, we show that investors with larger dealer networks make superior trading decisions before changes in credit fundamentals, resulting in better risk-adjusted performance. We trace these investors' superior trading decisions to trading connections where dealers are most likely to have access to novel credit-relevant information, supporting the interpretation that these investors obtain private information through their trading networks. Collectively, our evidence highlights the importance of trading relationships for investors' private information acquisition.
Fields of Study & Subjects
Financial Markets and Investment Strategies
Credit Risk and Financial Regulations
Corporate Finance and Governance
Publication details
- Journal / source
- Journal of Accounting and Economics
- Volume
- 82
- Issue
- 1
- Pages
- 101876–101876
- Publication date
- 11 February 2026
- Language
- EN