Private information imposes a severe trading disadvantage on uninformed traders while at the same time providing firms with valuable signals for investment adjustment. The two forces have opposite impacts on the cost of capital, and the net effect depends on which force dominates. We show that...

We use a revealed-preference approach to assess the impact of the exogenous relief in takeover threats, proxied by the staggered passages of state antitakeover laws, on corporate willingness to invest. By estimating an augmented investment Euler equation, we find that firms, particularly those...