This study examines how uncertainty affects corporate capital investment and how managerial flexibility influences this effect. Our evidence is consistent with the prediction of real options theory on investment. Specifically, we find that firms that face more uncertain future environment...

In this paper, we investigate the relation between accounting accruals and abnormal corporate investments and if the accrual-based anomaly documented by Sloan (1996) is distinct from the investment-based anomaly documented by Titman, Wei, and Xie (2004). Our results indicate that abnormal...

Firms that substantially increase capital investments subsequently achieve negative benchmark-adjusted returns. The negative abnormal capital investment/return relation is shown to be stronger for firms that have greater investment discretion, i.e., firms with higher cash flows and lower debt...

This paper attempts to distinguish between rational and behavioral explanations for the gross profitability effect in the international setting. Using data from 41 countries over the period 1980-2010, we find that in most countries, firms with higher gross profitability subsequently experience...

This paper presents evidence that suggests that in Japan, corporate ownership structure affects the relation between capital investment expenditures and firm performance. Specifically, there is a negative relation between capital expenditures and subsequent risk-adjusted returns amongst keiretsu...

Firms that spend the most on capital investments relative to their sales or total assets, subsequently achieve negative benchmark-adjusted returns. We consider two hypotheses to explain these returns. The first explanation, that firms artificially increase cash flows to fund investment...

Firms that substantially increase capital investments subsequently achieve negative benchmark-adjusted returns. The negative abnormal capital investment/return relation is shown to be stronger for firms that have greater investment discretion, i.e., firms with higher cash flows and lower debt...

This paper investigates the relation between ownership structure and firm value across a sample of 5,284 firm years of China's partially privatized former state-owned enterprises (SOE) from 1991-2001. We find that state and institutional shares are significantly negatively related to Tobin's Q,...

We employ World Bank Enterprise Survey data collected in 2006-2010 for 21,852 firms from 31 Latin American and Caribbean countries to investigate determinants of the adoption of International Organization for Standardization (ISO) certification, the relation between ISO certification and firm...