Question: One of the reasons why internal capital markets may be
One of the reasons why internal capital markets may be more efficient than external capital markets is that firms may not want to reveal full information about their sources of competitive advantage to external capital markets, in order to reduce the threat of competitive imitation. This suggests that external capital markets may systematically undervalue firms with competitive advantages that are subject to imitation. If you agree with this analysis, how could you trade on this information in your own investment activities?
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