, we ask what is, empirically, the best discounting method. To do this, we study listed firms, whose actual prices and … expected cash flows can be observed. We compare different discounting approaches on their ability to predict actual market … prices. We find that discounting based on expected returns (such as variants on the CAPM or multi-factor model), performs …

understand the challenge of translating risk management theory into managerial action. Cephalon Inc., a biotech firm, bought a … hedging concepts articulated by Froot, Scharfstein and Stein (1993). In applying the theory to practice, there are lessons for … both managers and theorists. Managers consider deadweight costs of financing and of risk management, whereas theory tends …