 Non-fundamental information disclosure and discretionary liquidity tradingLanyu Li, Hong Liu and Qingshan Yang Economic Modelling, 2025, vol. 147, issue C Abstract: We examine how the disclosure of non-fundamental information affects market attributes in the presence of discretionary liquidity traders. We find that the involvement of discretionary liquidity traders augments market liquidity, whereas non-fundamental information disclosure has the reverse effect. Furthermore, the effect of disclosure on the equilibrium number of discretionary liquidity traders depends on whether the speculator discloses information about only noise traders or all liquidity traders. Discretionary liquidity traders may result in multiple equilibria, which are related to the speculator’s disclosure preferences. Under specific conditions, the speculator can select the noise level of disclosed information to optimize profits, offering insights into how speculators make decisions regarding information disclosure in financial markets. Moreover, disclosure can minimize price volatility when the equilibrium number of informed traders is endogenously determined, offering practical guidance on how financial markets should use information disclosure strategies to stabilize stock prices. Keywords: Non-fundamental information; Discretionary liquidity traders; Market liquidity; Information efficiency; Price volatility (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:147:y:2025:i:c:s0264999325000331 DOI: 10.1016/j.econmod.2025.107038 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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