measure for real investment decisions is earnings beta — defined as the (normalized) covariance between firm profitability … (return on investment) and the aggregate profitability of all firms in the economy, not market beta. Earnings beta determines … the hurdle rate for project selection. Earnings beta is also the origin of market beta for asset pricing, but the mapping …

We examine the influence of institutional investors' investment horizons on a firm's cost of equity. We argue that the … cost of equity will decrease in the presence of institutional investors with longer-term investment horizons due to … of institutional investors with long-term investment horizons, all else remaining equal. Our results indicate also that …