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A new methodology for equity valuation arises from the perspective of managers' supply of capital assets. Under q …-theory, managers optimally adjust the supply of assets to changes in their market value. The first-order condition of investment then … provides a valuation equation that infers asset prices from managers' costs of supplying the assets. This equation fits well …
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through market-timing and catering, after controlling for growth and financial slack. This investment-mispricing link is more … sensitivity of investments to mispricing is a function of the nature of mispricing, the type of investment, and the firm …
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We decompose the difference between a firm's market value and book value into two components: reproducible intangible assets that can be created by competing firms through SG&A/R&D expenditures, and the residual denoted as franchise value which includes the value of transient-rents from...
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