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The Diversification Discount : Cash Flows vs. Returns
Lamont, Owen A. - 2010
Diversified firms have different values than comparable portfolios of single-segment firms. These value differences must be due to differences in either future cash flows or future returns. Expected security returns on diversified firms vary systematically with relative value. Discount firms...
Persistent link: https://www.econbiz.de/10012763347
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Learning and the Value of the Firm
Kiyotaki, Nobuhiro - 2021
The paper studies under what conditions the value of the firm occasionally increases for a while before it suddenly drops, like a "bubble". We consider the environment where the trend of net cash flow from a firm's production depends on uncertain quality of a manager, and the manager is...
Persistent link: https://www.econbiz.de/10013252321
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Tobin's Q, Corporate Diversification and Firm Performance
Lang, Larry H.P. - 2002
In this paper, we show that Tobin's q and firm diversification are negatively related. This negative relation holds for … different diversification measures and when we control for other known determinants of q. We show further that diversified firms … number of segment constant. Our evidence is consistent with the view that firms seek growth through diversification when they …
Persistent link: https://www.econbiz.de/10012787492
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The Economics of Hedge Funds : Alpha, Fees, Leverage, and Valuation
Lan, Yingcong - 2011
Hedge fund managers are compensated via management fees on the assets under management (AUM) and incentive fees indexed to the high-water mark (HWM). We study the effects of managerial skills (alpha) and compensation on dynamic leverage choices and the valuation of fees and investors' payoffs....
Persistent link: https://www.econbiz.de/10013128908
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Efficient and Inefficient Sales of Corporate Control
Bebchuk, Lucian A. - 2010
This paper develops a framework for analyzing transactions that transfer a company's controlling block from an existing controller to a new controller. This framework is used to compare the market rule, which is followed in the United States, with the equal opportunity rule, which prevails in...
Persistent link: https://www.econbiz.de/10013139247
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The Valuation of Long-Dated Assets
Martin, Ian - 2010
The expected time- and risk-adjusted cumulative return on any asset equals one at all horizons. Nonetheless, I show that a typical asset's realized time- and risk-adjusted cumulative return tends to zero almost surely. As a corollary, the value of a typical long-dated asset is driven by extreme...
Persistent link: https://www.econbiz.de/10013139893
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Modeling Structural and Temporal Variation in the Market's Valuation of Banking Firms
Kane, Edward J. - 2008
This paper decomposes both the market sensitivity and the interest-rate sensitivity of bank stock into on-balance-sheet and off-balance-sheet components. It derives these constituent and often-offsetting sensitivities from a nonstationary three-equation model that employs accounting and...
Persistent link: https://www.econbiz.de/10012774829
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Optimal Contracting, Corporate Finance, and Valuation with Inalienable Human Capital
Bolton, Patrick - 2015
A risk-averse entrepreneur with access to a profitable venture needs to raise funds from investors. She cannot indefinitely commit her human capital to the venture, which limits the firm's debt capacity, distorts investment and compensation, and constrains the entrepreneur's risk-sharing. This...
Persistent link: https://www.econbiz.de/10013027264
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Buyout Activity : The Impact of Aggregate Discount Rates
Haddad, Valentin - 2016
Buyout booms form in response to declines in the aggregate risk premium. We document that the equity risk premium is the primary determinant of buyout activity rather than credit-specific conditions. We articulate a simple explanation for this phenomenon: a low risk premium increases the present...
Persistent link: https://www.econbiz.de/10012986691
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Irreversible Investment, Capacity Choice, and the Value of the Firm
Pindyck, Robert S. - 2021
irreversibleand future demand is uncertain. Investment requires the fullvalue of a marginal unit of capacity to be at least as large …
Persistent link: https://www.econbiz.de/10013225842