Last weekend, The Wall Street Journal highlighted new academic research [1] showing that investors may be trading on insider information after companies approach hedge funds for loans. When companies ask hedge funds to consider giving them a loan, they typically require that the funds sign nondisclosure agreements. That's because the borrowers divulge confidential financial information in the process of trying to get a loan -- information that can provide insight into a company's future performance. That, in turn, can be valuable to investors.
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