The PER is the most commonly used parameter in the stock market. The PER is the result of dividing the equity market value by the company's profit after tax.The PER depends on a number of factors, some of which are out of the company's control, such as variations in interest rates, and others...

We propose the standard neoclassical model of investment under uncertainty with short‐run adjustment frictions as a benchmark for earnings‐return patterns absent accounting influences. We show that our proposed benchmark generates a wide range of earnings‐return patterns documented in...

Stocks with high idiosyncratic volatility perform poorly relative to low idiosyncratic volatility stocks. We offer a novel explanation of this anomaly based on real options, which is consistent with earlier findings on idiosyncratic volatility (the positive contemporaneous relation between...

We examine the effect of debt financing capacity on firm innovation by employing a shock that increases firms' asset pledgeability. We find that firms increase innovation activities after the shock, and the increase is greater in regions with more effective enforcement and in firms with more...

We examine the influence of investor conferences on firms' stock liquidity. We find that firms participating in conferences experience a 1.4% to 2.8% increase in stock liquidity compared to non-conference firms. Consistent with investor conferences improving firm visibility, the increase in...

This paper investigates the robustness of post-earnings-announcement-drift (PEAD) on a price signal perspective, unlike the traditional literature that focuses on fundamental signal. The studied period is 2003-2015, for four main US indices. The results suggest that some economic agents are too...

We examine the response of investment to peers' stock prices. While the response to average peer-Q is typically positive, the response to prices of peer firms that are more threatening and those of industry leaders is reliably negative. The responses are more strongly negative when the prices...