Read it all, and then pay attention to last paragraph .
To test which scenario is more likely, Goldstein and Guembel consider a company that is about to spend money for a project with an ultimate value to the firm that cannot be exactly determined. At the same time, there is a speculator who knows something about the value of the project that the firm does not. He may, for example, have a special insight into the likely cost of capital.
If this insight suggests the firm’s spending plan will work out well, the speculator will buy the stock, and his demand will help push the share price up. If the insight suggests the spending plan will fail, he will sell the stock and the reduced demand will nudge the price down. Either way, the speculator’s insight is reflected in the share price.
Goldstein and Guembel then add a new element to this traditional view of the market: The firm considers the share-price change to be a sign of the market’s judgment about the wisdom of its spending plan. If the price falls, the judgment appears to be negative and the firm may abandon the plan.
Up to this point, the speculator is making a decision according to his assessment of the spending plan. But Goldstein and Guembel argue that a speculator who has no particular insight into the plan can exploit the process to deliberately drive down the share price.
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