In this paper we investigate whether selling, general and administrative (SG&A) expenditure (excluding R&D and advertising expenditure) creates a long-lived asset. GAAP requires SG&A expenditure to be expensed immediately as a period cost to recognize using up of economic benefits. We...

We use the residual-income valuation model to simultaneously estimate firm-specific implied long-term growth rate in abnormal earnings and cost of capital by relating earnings-to-price and book-to-market ratios in a linear fashion. This simple framework estimates investors' consensus beliefs...

This study focuses on the relation between current compensation and past performance measures as signals of a CEO’s ability. We develop a simple two-period principal-agent model with moral hazard and adverse selection and test theoretical predictions using CEO compensation data from 1993-2006....

In this paper we investigate how incentives affect managers’ input resource expenditure decisions and how firms make equity grant decisions considering managerial behavior. Focusing on selling, general and administrative (SG&A) expenditure, we first document that SG&A expenditure creates...

Neuropsychological studies propose that listeners unconsciously assess speakers’ trustworthiness via their facial expressions. Building on this theory, we investigate how investors respond to CEOs’ dynamic hemifacial asymmetry of expressions (HFAsy) shown on CNBC’s video interviews about...

Survey evidence reveals that managers prefer to avoid dilution of earnings per share (EPS), though financial theory suggests it is irrelevant in firm valuation. We explore contracting and behavioral explanations for this apparent paradox using a large sample of debt-equity issuers. We first...