Musumeci, Jim; Peterson, Mark - In: Journal of Corporate Finance 17 (2011) 5, pp. 1272-1288
Researchers often form ratios of variables to measure firm characteristics, but which ratios create the most powerful tests? For example, if we use ratios of book value of equity (BE) and market value of equity (ME), or earnings (E) and price (P), does it matter which variable appears in the...