IDEAS home Printed from https://ideas.repec.org/h/spr/sprchp/978-3-030-91231-4_57.html
   My bibliography  Save this book chapter

Arbitrage Opportunity Set and the Role of Corporations

In: Encyclopedia of Finance

Author

Listed:
  • James S. Ang

    (College of Business, Florida State University)

  • Yingmei Cheng

    (Florida State University)

Abstract

We show that capital asset markets are made more efficient when investors and corporations could both engage in arbitrage. Previously known limits to arbitrage by investors are mitigated by explicitly recognizing the role of corporations as arbitragers. We derive the equilibrium regimes in which the dominant arbitrageurs in the capital markets are the investors, the corporations, both, or neither. Corporations enlarge the arbitrage opportunity set as they have several unique properties that could not be replicated by investors as arbitragers. We suggest that the desire to exploit arbitrage opportunities infeasible to investors could provide a new explanation for the formation of corporations.

Suggested Citation

  • James S. Ang & Yingmei Cheng, 2022. "Arbitrage Opportunity Set and the Role of Corporations," Springer Books, in: Cheng-Few Lee & Alice C. Lee (ed.), Encyclopedia of Finance, edition 0, chapter 57, pages 1317-1344, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-91231-4_57
    DOI: 10.1007/978-3-030-91231-4_57
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sprchp:978-3-030-91231-4_57. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.