This paper demonstrates how managers with private information about firms′ exposure to risk may, in the best interest of shareholders, engage in speculation instead of hedging as the conventional wisdom tells us. The reason is that when profits serve as a signal of firms′ values, speculative trades can be used to distort profits and hence manipulate stock prices to the shareholders′ advantage. A consequence of such corporate speculation is that stock prices become less informative about firms′ true worth. Journal of Economic Literature Classification Numbers: D82, G14, G32.