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Matching Methods in Valuation with Finite Cash Flows : An Annotated Appendix

Tham, Joseph - 2019

This is an annotated appendix that accompanies the paper. In this note, we provide detailed commentary on a numerical example that illustrates the ideas that we discuss in the main paper. The numerical example is in Table18.10, Chapter 8, page 656, of the third edition of Corporate Finance,...

Persistent link: https://www.econbiz.de/10012888920

Matching Methods in Valuation with Finite Cash Flows : An Almost Perfect Textbook Example

Tham, Joseph - 2019

In this note, we extend a numerical example in the textbook by Berk & DeMarzo that matches methods for only when KTS is equal to KD. We show that there is a generalized formulation for the return to levered equity KE that works for any value of KTS, the appropriate discount rate for the tax...

Persistent link: https://www.econbiz.de/10012889082

The Unbearable Longevity of the Classic Free Cash Flow (FCF) WACC : A Nontechnical Retrospection

Tham, Joseph - 2019

In this short note, we present a nontechnical retrospection on the unbearable longevity of the classic WACC (Weighted Average Cost of Capital) for the Free Cash Flow (FCF) in perpetuity. Over the past two decades, researchers in finance have increased greatly our understanding of the properties...

Persistent link: https://www.econbiz.de/10012890819

What Can We Learn from Stock Prices? Cash Flow, Risk and Shareholder Welfare

Mitts, Joshua - 2019

Price is expected cash flows discounted at the risk-free rate and a discount for risk exposure. Price-equivalency does not always imply welfare-equivalency: shareholders are not necessarily indifferent between a price increase of $1 from higher cash flows and the same $1 increase from lower risk...

Persistent link: https://www.econbiz.de/10012897393

The Origin, Ownership and Use of Cash Flows in Leveraged Buyouts

Ayash, Brian - 2019

This paper uses cash flow statements to study leveraged buyouts between 1980 and 2006 of large publicly traded U.S. firms by private equity funds. Presenting the origin, ownership and use of cash in these transactions, I show that once they are controlled by private equity funds, these firms...

Persistent link: https://www.econbiz.de/10012899450

Cash Flow News and Stock Price Dynamics

Pettenuzzo, Davide - 2019

We develop a new approach to modeling dynamics in cash flow data extracted from daily firm-level dividend announcements. We decompose daily cash flow news into a persistent component, jumps, and temporary shocks. Empirically, we find that the persistent cash flow component is a highly...

Persistent link: https://www.econbiz.de/10012899966

Cash Flow Duration and the Term Structure of Equity Returns

Weber, Michael - 2018

The term structure of equity returns is downward-sloping: stocks with high cash flow duration earn 1.10% per month lower returns than short-duration stocks in the cross section. I create a measure of cash flow duration at the firm level using balance sheet data to show this novel fact. Factor...

Persistent link: https://www.econbiz.de/10012936819

Estructura Optima de Capital Para Flujos de Caja Finitos (Optimal Capital Structure for Finite Cash Flows)

Mejia-Pelaez, Felipe - 2018

This paper has an English version and can be downloaded from: "http://ssrn.com/abstract=1799605" http://ssrn.com/abstract=1799605En este trabajo se muestra cómo encontrar la estructura óptima de capital y el valor con un endeudamiento constante y variable período a período, cuando la tasa de...

Persistent link: https://www.econbiz.de/10012940457

FASB was Right : Earnings Beat Cash Flows when Predicting Future Cash Flows

Ball, Ray - 2020

Do accruals-based accounting earnings provide better information to investors about future operating cash flows than operating cash flows themselves, as predicted by FASB's conceptual framework? The most recent evidence (Nallareddy et al., 2020) is that operating cash flows, measured correctly...

Persistent link: https://www.econbiz.de/10012823531

Month-End Reporting, Cash-Flow News, and Asset Pricing

Hong, Claire Yurong - 2020

month-end reporting, even before the quarterly earnings announcement. Such cash-flow news concentrates at the beginning of a … month and affects company announcements, analyst revisions, and stock returns. Using this time variation in cash-flow news …, we show evidence supporting cash-flow news being more persistent than discount-rate news. Individual stock returns …

Persistent link: https://www.econbiz.de/10012824022