In contrast to the theory based propositions in Modigliani and Miller (1958; 1963) of a positive relationship between the cost of equity capital and financial leverage, claims of a negative empirical relationship between stock returns and leverage have been made in the article 'The Book-to-Price...

In contrast to the capital structure propositions in Modigliani and Miller (1958, 1963), most empirical research has not been able to find a positive association between stock returns and financial leverage. Several reasons have been proposed for this, including suggestions about omitted risk...

For a full text file please contact the corresponding author: Kenth Skogsvik (E-mail: kenth.skogsvik@hhs.se).

Using Swedish data, the study investigates whether an investment strategy based on publicly available financial statement information can generate abnormal investment returns. The strategy involves two steps. First, a financial statement based prediction model of changes in the book return on...

Relative P/E-ratio valuation apparently still plays an important role among investment research analysts and advisors (cf. Goldman Sachs,1999). In a valuation model of this kind, the value of owners´equity is typically calculated as a function of an observed P/E-ratio for some peer company, or...