Using a panel data set for international corporate bonds and capital account restrictions in advanced and emerging economies, we show that restrictions on capital inflows produce a substantial and economically meaningful increase in corporate bond spreads. A number of heterogeneities suggest...

This paper provides a different way of thinking about, and dealing with, four important issues. First, the overarching purpose of a firm involves communicating a vision, organizing to survive and prosper, working continually to develop win-win relationships, and taking care of future...

This paper develops a firm-level measure of myopic market pricing, which captures the extent to which the market overvalues short-term expected abnormal earnings relative to longer-term ones. The empirical analysis shows that myopically priced firms manage earnings more actively and invest less...

We investigate the relationship between bankruptcy risk and expected future sales growth for Norwegian non-listed firms for the period 1988-2007. We find that firms with high bankruptcy risk also have high expected future growth. Financial ratios characterizing firms with high bankruptcy risk...

The dividend growth model (“DGM”), sometimes called the dividend discount model or discounted cash flow model, is a commonly used tool for estimating the cost of equity capital, particularly in the context of utility rate setting and unitary appraisal. Although the assumption of constant...

Fluctuations in investor demand dramatically affect firms' valuation and access to capital. To quantify their real impact, we develop a dynamic investment model that endogenizes both the demand- and supply-side of capital. Strong investor demand elevates equity prices and dampens price impacts...

We show that public firm profit rates fell by half since 1980. Inferred as the residual from the rise of US corporate profit rates in aggregate data, private firm profit rates doubled since 1980. Public firm financial returns matched their fall in profit rates, while public firm...

We show that the standard notion of residual income (RI) does not fulfill additive coherence. This gives rise to ambiguities and inconsistencies. The pitfall resides in the capital charge, which blends a non-market value with a market rate. We solve the problem by using a capital charge based on...

Previous research finds correlation between sentiment and future economic growth, but disagrees on the channel that explains this result. In this paper, we shed new light on this issue by exploiting cross-country variation in sentiment and market efficiency. We find that sentiment shocks in G7...

An important, emerging literature suggests that the proximate cause of the recent financial crisis was an old-fashioned bank run of the sort that was common prior to the Great Depression. But instead of individuals converging on the local savings and loan, this bank run involved investment...