Event studies typically use the methodology developed by Fama et al. [1969. The adjustment of stock prices to new information. International Economic Review 10, no. 1: 1-21] to segregate a stock's return into expected and unexpected components. Moreover, conventional practice assumes that...

The use of an inter-temporally constant discount rate or cost of capital is a strong assumption in many <italic>ex ante</italic> models of finance and in applied procedures such as capital budgeting. We investigate how robust this assumption is by analysing the implications of allowing the cost of capital to...