We develop a model of stock-split behavior in which the split serves as a costly signal of managers' private information because stock trading costs depend on stock prices. We present empirical evidence confirming the relation between stock trading costs and stock prices. The signaling model is...

Real options analysis is becoming a more widely used approach for valuing capital investments today. Here we highlight the key elements of the approach and suggest how executives can use it to guide their thinking for more general strategic decisions as well as for capital investments

Financial metrics such as earnings, earnings per share growth, economic value added (EVAreg;--the residual income or loss above or below the opportunity cost of capital), or even the percent increase in economic value added to not correlate with the total return to shareholders, according to our...

Our experience has been that a deliberate capital efficiency program can surface ideas that result in permanent capital spending cuts of between 10 and 25 percent - without changing the quantity or quality of goods and services provided by the company. Most capital spending programs require net...

The purpose of this article is to introduce expectations based management (EBM) as an approach that (1) links the company's performance to its total return to shareholders, (2) emphasizes the necessity of clear communication with both external and internal constituencies, and (3) describes how...