Dear all, on behalf of Professors Axel Leijonhufvud and Enrico Zaninotto of the University of Trento, it is our pleasure to inform you about the forthcoming 15 th Summer School organized by the Department of Economics and Management of the University of Trento (Italy): “ Intensive course in “ Intensive course on Financial Crises ” that will be held at Hotel Villa Madruzzo in Trento (Italy), 16 - 27 June 2014. We would very much appreciate your bringing the attached announcement to the attention of graduate students, Ph. D. students and post-docs. Further information about the school is available at the following web site: http://www-ceel.economia.unitn.it/school/s2014/index.html With best personal regards, Maria Grazia Zorzi Summer School Secretariat CEEL - Department of Economics and Management University of Trento - Italy mailto: ccschool@economia.unitn.it www-ceel.economia.unitn.it
Margin Trading, Overpricing, and Synchronization Risk Sanjeev Bhojraj and Robert J. Bloomfield S.C. Johnson Graduate School of Management, Cornell University William B. Tayler Goizueta Business School, Emory University We provide experimental evidence that relaxing margin restrictions to allow more short selling can exacerbate overpricing, even though it reduces equilibrium price levels. This is because smart-money traders initially profit more by front-running optimistic investor sentiment than by disciplining prices. When short selling is not possible, competitive pressures among arbitrageurs rapidly drive prices to the equilibrium. However, the risk of margin calls slows the convergence process, because arbitrageurs who sell short too early face substantial losses if they are unable to synchronize their trades with other arbitrageurs (as in Abreu and Brunnermeier. 2002. Journal of Financial Economics 66(2–3):341–60; 2003. Econometrica 71(1):173–204). (JEL G14, C92) Margin Trading, Overpricing, and Synchronization Risk.pdf