Price Informativeness and Corporate Investment: A Model of Costly Manipulation and Share Repurchases

• 成果类型: Article; Early Access
• 署名作者: Campello, Murillo; Matta, Rafael; Saffi, Pedro A. C.
• 署名单位: State University System of Florida; University of Florida; National Bureau of Economic Research; SKEMA Business School; Universite Cote d'Azur; CUNEF Universidad; University of Cambridge
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2024.05452
• 发表日期: 2025
• 关键词: short selling costs; stock manipulation; Informed trading; Corporate investment; SHARE REPURCHASES

摘要

We characterize how managers can curb manipulation by signaling information via stock repurchases in an environment with costly short selling and feedback effects from trading to firms' access to capital. Without repurchases, manipulation coexists with informed trading at low shorting costs, reducing price informativeness and firm investment. Manipulation becomes less profitable as shorting costs increase, making prices more informative and boosting investment if speculators are less informed. Incentives to manipulate cease to exist at moderate short selling costs, but making shorting more costly reduces price informativeness and firm investment. Our model shows how contracts that precommit funding and condition future investment on stock prices can induce managers to eliminate manipulation through stock repurchases, facilitating optimal investment policies. An important policy implication is that when stock repurchases are allowed and shorting costs are low, short selling bans will typically reduce investment efficiency.