I construct a neoclassical, Q-theoretical foundation for time-varying expected returns in connection with corporate policies and events. Under certain conditions, stock return equals investment return, which is directly tied with firm characteristics. This single equation is shown analytically...

This study investigates the relationship between managerial optimism, investment efficiency and firm valuation. This study follows the Campbell's measurement for managerial optimism and investigates the influences of the different levels of managerial optimism on improving investment efficiency...

Credit rating agencies emphasize the importance of specific financial ratio thresholds in their rating process. Firms below these thresholds are more likely to receive higher ratings than similar firms that are not. I show that firms near key Debt/EBITDA thresholds are significantly more likely...

This article documents differences between the Q-sensitivity of investment of stand-alone firms and unrelated segments of conglomerate firms. Unrelated segments exhibit lower Q-sensitivity of investment than stand-alone firms. This fact is driven by unrelated segments of conglomerate firms that...

We study how investability, or openness to foreign equity investors, affects firm value in a sample of over 1,400 firms from 26 emerging markets. We find that, on average, investability is associated with a 9% valuation premium (as measured by Tobin's q). However, in firm-fixed effects...

Investment of U.S. firms responds asymmetrically to Tobin's Q: investment of established firms -- 'intensive' investment -- reacts negatively to Q whereas investment of new firms -- 'extensive' investment -- responds positively and elastically to Q. This asymmetry, we argue, reflects a...