Edmund Lee

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This paper identi…es a limit to arbitrage that arises from the fact that a …rm's fundamental value is endogenous to the act of exploiting the arbitrage opportunity. Trading on private information reveals this information to managers and helps them improve their real decisions, in turn enhancing fundamental value. While this increases the pro…tability of a(More)
  • Alex Edmans, Itay Goldstein Wharton, Wei Jiang, Yakov Amihud, Ali Aram, Nick Barberis +22 others
  • 2014
We analyze strategic speculators' incentives to trade on information in a model where …rm value is endogenous to trading, due to feedback from the …nancial market to corporate decisions. Trading reveals private information to managers and improves their real decisions, enhancing fundamental value. This feedback e¤ect has an asymmetric e¤ect on trading(More)
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