We examine the economic content of accruals and investment and test whether they are related to nonlinear equity value and asymmetric returns arising from firm growth. We confirm that current accruals mainly reflect capital investment commitment to assets in place arising from past growth,...

We investigate the reasons for there being an apparent limit to the accuracy of valuation using multiples, when it is implemented in a standard way. We find that most of the error comes from failing to correct known biases in earnings forecasts. Another part comes from mismatching observable...

We examine the empirical properties of the theoretical Black–Scholes–Merton (BSM) bankruptcy model. We evaluate the predictive ability of various existing modifications of the BSM model and extend prior studies by estimating volatility directly from market-observable returns on firm value.We...