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Information Asymmetry, Information Precision, and the Cost of Capital

Leuz, Christian; Lambert, Richard A.; Verrecchia, Robert E. - National Bureau of Economic Research (NBER) - 2009

rise to a separate information-risk factor. These points are important to empirical research in accounting and finance, as …

Persistent link: https://www.econbiz.de/10004992855

Understanding the Accrual Anomaly

Zhang, Lu; Wu, Jin Ginger; Zhang, X. Frank - National Bureau of Economic Research (NBER) - 2007

Interpreting accruals as working capital investment, we hypothesize that firms rationally adjust their investment to respond to discount rate changes. Consistent with the optimal investment hypothesis, we document that (i) the predictive power of accruals for future stock returns increases with...

Persistent link: https://www.econbiz.de/10005828684

Political Risk Spreads

Bekaert, Geert; Harvey, Campbell; Lundblad, Christian; … - National Bureau of Economic Research (NBER) - 2014

We introduce a new, market-based and forward looking measure of political risk derived from the yield spread between a country's U.S. dollar debt and an equivalent U.S. Treasury bond. We explain the variation in these sovereign spreads with four factors: global economic conditions,...

Persistent link: https://www.econbiz.de/10010951038

A Model of R&D Valuation and the Design of Research Incentives

Hsu, Jason C.; Schwartz, Eduardo S. - National Bureau of Economic Research (NBER) - 2003

We develop a real options model of R&D valuation, which takes into account the uncertainty in the quality of the research output, the time and cost to completion, and the market demand for the R&D output. The model is then applied to study the problem of pharmaceutical under-investment in R&D...

Persistent link: https://www.econbiz.de/10005085206

R&D Investments with Competitive Interactions

Miltersen, Kristian R.; Schwartz, Eduardo S. - National Bureau of Economic Research (NBER) - 2004

In this article we develop a model to analyze patent-protected R&D investment projects when there is (imperfect) competition in the development and marketing of the resulting product. The competitive interactions that occur substantially complicate the solution of the problem since the decision...

Persistent link: https://www.econbiz.de/10005774460

Pharmaceutical Stock Price Reactions to Price Constraint Threats and Firm-Level R&D Spending

Golec, Joseph; Hegde, Shantaram; Vernon, John A. - National Bureau of Economic Research (NBER) - 2005

Political pressure in the United States is again building to constrain pharmaceutical prices either directly or through legalized reimportation of lower-priced pharmaceuticals from foreign countries. This study uses the Clinton Administration's Health Security Act (HSA) of 1993 as a natural...

Persistent link: https://www.econbiz.de/10005778358

Investment, Accounting, and the Salience of the Corporate Income Tax

Edgerton, Jesse - National Bureau of Economic Research (NBER) - 2012

This paper develops and tests the hypothesis that accounting rules mitigate the effect of tax policy on firm investment … flows and accounting profits. I estimate the weight placed on accounting profits by comparing the effectiveness of tax … incentives that do and do not affect them. Investment tax credits, which do affect accounting profits, have larger effects on …

Persistent link: https://www.econbiz.de/10010969285

Are Firms in "Boring" Industries Worth Less?

Chen, Jia; Hou, Kewei; Stulz, René M. - National Bureau of Economic Research (NBER) - 2015

Using theories from the behavioral finance literature to predict that investors are attracted to industries with more salient outcomes and that therefore firms in such industries have higher valuations, we find that firms in industries that have high industry-level dispersion of profitability...

Persistent link: https://www.econbiz.de/10011133503

Asset Pricing Implications of Macroeconomic Interventions An Application to Climate Policy

Mehra, Rajnish - National Bureau of Economic Research (NBER) - 2013

This paper illustrates that evaluating alternate abatement polices that affect the growth path of an economy on the basis of their effects on asset valuation may not be welfare enhancing. We show that the class of abatement polices considered in the integrated assessment literature are robust...

Persistent link: https://www.econbiz.de/10010821892

Investment-Based Underperformance Following Seasoned Equity Offerings

Zhang, Lu; Lyandres, Evgeny; Sun, Le - National Bureau of Economic Research (NBER) - 2005

Adding a return factor based on capital investment into standard, calendar-time factor regressions makes underperformance following seasoned equity offerings largely insignificant and reduces its magnitude by 37-46%. The reason is that issuers invest more than nonissuers matched on size and...

Persistent link: https://www.econbiz.de/10005580565