Belo, Frederico; Xue, Chen; Zhang, Lu - In: Review of Financial Studies 26 (2013) 12, pp. 3029-3067
A new methodology for equity valuation arises from the perspective of managers' supply of capital assets. Under q-theory, managers optimally adjust the supply of assets to changes in their market value. The first-order condition of investment then provides a valuation equation that infers asset...