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Government interventions in hybrid information markets

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Listed:
  • Ma, Yong
  • Yu, Yiwei

Abstract

We theoretically examine the role of government intervention in mitigating the adverse market effects caused by hybrid information. Compared to purely fundamental information, hybrid information increases liquidity and trading volume but reduces market efficiency and promotes mispricing. Government interventions, such as mandatory information disclosure and trading against noise, can alleviate efficiency losses and mispricing driven by hybrid information trading; however, trading against noise results in lower liquidity and decreased trading activity. Our findings provide insights into how governments should balance short- and long-term economic policies.

Suggested Citation

  • Ma, Yong & Yu, Yiwei, 2026. "Government interventions in hybrid information markets," Economics Letters, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:ecolet:v:260:y:2026:i:c:s0165176526000133
    DOI: 10.1016/j.econlet.2026.112819
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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