This paper develops an analytically coherent yet parsimonious framework which explains market returns in terms of contemporaneous information. It anchors on the idea that valuation (static perspective) can be connected to the dynamics that explains returns, and vice versa. The framework requires...

We study the use of firms' book-to-market ratios (B/M) in value investing and its implications for comovements in firms’ stock returns and trading volumes. We show B/M has become increasingly detached from common alternative valuation ratios over time while also becoming worse at forecasting...

This paper aims to test the accuracy of three well-known equity valuation models for the period 1990 to 2006. This was done to a sample of German listed firms which diverge from the US market in accounting standards, market maturity and corporate governance culture (bank-based in contrast to the...

We provide new insights into the determinants of acquirer announcement returns with a unique sample of targets that are acquired within three years of their IPOs. Existing studies of acquisitions of private and established public targets find positive relations between acquirer announcement...

The Dividend Discount return model (DDM) is a stock valuation tool used by many financial institutions. It is a natural generalization of the yield-to-maturity concept used to value bonds. In perhaps its most "standard" form (Sharpe (1981), pp. 381-82), analysts' forecasts of earnings,...

The Growth Value Model (GVM) proposed theoretical closed form formulas consisting of Return on Equity (ROE) and the Price-to-Book value ratio (P/B) for fair stock prices and expected rates of return. Although regression analysis can be employed to verify these theoretical closed form formulas,...

This book on corporate finance systemically integrates firms' approach toward the market, the value fundamentals of investors, and the pricing dynamics of financial markets. The reader is first introduced to an illustration and analysis of some of the main models used in corporate finance and in...