We present the first evidence that initial ratings of commercial paper influence common stock returns. Highly-rated industrial issues of commercial paper, unaccompanied by bank letters of credit, are associated with significantly positive abnormal returns; lower-rated issues are not. The stock...

Mutual fund splits occur in high-priced funds after unusually high returns. Split factors are related to the deviation of a fund's price from the mean of other funds' prices. Post-split numbers of shareholders and assets do not increase compared with funds having similar rates of asset growth....

This article provides the basic theory of double leverage used in utility rate regulation. It derives the double leverage adjustment for finding the cost of capital of a wholly-owned subsidiary from fundamental cost of capital propositions. The standard estimates of capital costs using this...

This papers derives four-five year predictions of growth rates of accounting earnings per share implicit in four expected return models commonly used in financial research. A comparison of such growth rates with those produced and reported by Value Line analysts and those generated by a...

A model of optimal dividend payout is presented in which increased dividends lower agency costs but raise the transactions cost of external financing. The optimal dividend payout ratio minimizes the sum of these two costs. A cross-sectional test of the model relates dividend payout to the...

Two essentially opposite accounting policy decisions were the FASB proposal to eliminate full cost (FC) accounting and the SEC proposal 13 months later to allow FC accounting while reserve recognition accounting was developed. The SEC's reversal of the FASB decision provides an opportunity to...

The ROPE model is a three-phase model that generates estimates of future dividends by incorporating estimates of return on equity and payout ratios rather than assuming that dividend growth rates decline linearly as in the second stage of the three-phase model. Growth firms often experience an...

This article presents evidence that dividend yields are directly related to and predict future stock returns: The higher the yield, the higher the stock return. The paper uses the constant dividend growth model and the subsidiary Golden Rule of Accumulation view that real long-term growth equals...

This article shows that if the market has an expected positive risk premium, then lump-sum investing is mean-variance superior to dollar-averaging. In showing this, it is critical to hold constant the risks of the two policies. When this is done over a 12-month horizon, lump-sum investing...

Gain and loss, calculated from the upside and downside portions of return distributions, play a pivotal role in the two-state model. A two-state economy possesses a universal gain-loss ratio (G/L) for all assets that is related to the ratio of state prices and to the familiar risk-neutral...