Mandatory pension contributions (MCs) are negative shocks to a firm's liquidity that can unfavorably impact its cost of capital, financing, and investment plans. We study whether firms faced with MCs use both non-cash (NEM) and cash generating earnings management (CEM) to partly offset their...

We propose a genuinely internal approach to project valuation and decision based on the average Return On Investment (ROI), obtained as the ratio of total operating profit (NOPAT) to total invested capital or, equivalently, as the ratio of net cash flow to total invested capital. The approach...

This study examines the impact of non-financial disclosure (NFD) on firms' labor investment efficiency. We analyze a broad sample of firms located across 44 countries and the period 2006–2019. Using regression analysis, the association between abnormal employment growth and environmental,...

Over the period 1980-2007 multinational firms' investment grew four times faster than worldwide GDP. Yet the evidence on whether global diversification is valuable is inconclusive. This paper uses detailed FDI data for 251 UK multinational firms and 4,676 subsidiaries to show that multinational...

This paper presents evidence that subsidiaries of multinational firms have higher valuations than locally matched firms. Using a unique sample of 251 UK multinational firms and 4,676 subsidiaries, the paper finds that multinational firms achieve, on average, an international diversification...

Equity risk premiums are a central component of every risk and return model in finance and are a key input into estimating costs of equity and capital in both corporate finance and valuation. Given their importance, it is surprising how haphazard the estimation of equity risk premiums remains in...

This study examines cash savings from net equity issues, net debt issues and internally generated cash flows. We observe that savings rates depend on the level of cash flows. For negative cash flows, savings rates are very low from cash flows and higher from net equity and net debt issues. For...

The causality relationships and cumulative impacts of the lags of earnings and the lags of capital expenditure on subsequent annual stock returns is examined using 40 different countries. The results suggest that there is a granger causality relationship from earnings to returns. Furthermore,...

This paper examines the impact of internal governance on a CEO's investment cycle. Extant literature defines internal governance as the mechanism by which senior executives help discipline the CEO to maximize shareholder value. Weisbach (1995) finds that a year or two before the CEO retires, the...

This paper investigates the effect of major board independence reforms on corporate investment efficiency using a large sample of firms from 30 countries. We find evidence of a significant reduction in over-investment subsequent to initiation of board reforms. This reduction is most effective...