We quantify how much nonfundamental movements in stock prices affect firm decisions. We estimate a dynamic investment model in which firms can finance with equity or cash (net of debt). Misvaluation affects equity values, and firms optimally issue and repurchase overvalued and undervalued...

We estimate a dynamic investment model in which firms finance with equity, cash, or debt. Misvaluation affects equity values, and firms optimally issue and repurchase overvalued and undervalued shares. The funds flowing to and from these activities come from investment, dividends, or net cash....

To understand consumers' investment decisions, national surveys such as the Health and Retirement Study elicit consumers' expectations about stock market movements. Analyses of stock market expectations show substantial heterogeneity between consumers. It is commonly speculated that this...

Expectations about stock market movements are an important factor in models of investments and savings. To better understand consumers' financial behavior, economic surveys such as the Health and Retirement Study (HRS) ask participants to report expectations about the stock market. However,...