Many studies argue that differences in information across securities explain much of the cross-sectional variation in stock return volatility. We offer an explanation beyond that previously identified in the literature by developing a proxy for differential information. Our proxy follows from...

Most valuation models begin with a measure of accounting earnings to arrive at cash flow estimates. When using accounting earnings, we implicitly assume that the income is obtained by netting out only those expenses that are operating expenses, i.e., expenses designed to generate revenues in the...

In traditional valuation models, we begin by forecasting earnings and cash flows anddiscount these cash flows back at an appropriate discount rate to arrive at the value of a firm or asset. This task is simpler when valuing firms with positive earnings, a long history of performance and a large...

Most firm valuation models start with the after-tax operating income as a measure of the operating income on a firm and reduce it by the reinvestment rate to arrive at the free cash flow to the firm. Implicitly, we assume that the operating expenses do not include any financing expenses (such as...

In recent years, firms have turned to their attention increasingly to ways in which they can increase their value. A number of competing measures, each with claims to being the quot;bestquot; approach to value creation, have been developed and marketed by investment banking firms and consulting...

In recent years, practitioners and academics have made the argument that traditional discounted cash flow models do a poor job of capturing the value of the options embedded in many corporate actions. They have noted that these options need to be not only considered explicitly and valued, but...

The last two decades have seen a stream of innovation in financial markets, especially in the corporate bond arena. Some of these innovations were designed to give firms moreflexibility in designing cash flows on borrowings, allowing them to match up cash flows on financing more closely to cash...