The USAGE model for the United States is used to quantify economic costs due to stock mispricing, made operational by shocking Tobin’s q. The simulations quantify a potentially large impact even in the most favorable environment, where export demand holds up, and, the dollar is pro-cyclical. A...

In the present paper an empirical analysis will point out that shadow economy can affect stock prices. The sample covers most industrialized world. Data are taken from Eurostat and (Schneider et al., 2010); (Schneider, 2013). The elaboration of these panel data is made feasible by means of the...

We find that equity mispricing impacts the speed at which firms adjust to their target leverage and does so in predictable ways depending on whether the firm is over- or underlevered. For example, firms that are above their target leverage and should therefore issue equity (or retire debt),...