We examine the relationship between investment and saving for a cross section of European countries before and during the euro crisis. Investment is positively and significantly related to saving, and this relationship is stronger during the euro crisis period. This increase is a departure from...

We study the headquarters location of U.S. firms with an initial public offering (IPO) over the period 2001-2011. Specifically, we examine IPO intensity, defined as IPOs in a state scaled by state population. We find that IPO intensity is positively related to various measures of education. We...

The study of the stock price reaction to an event is a standard tool in economics and finance. The spate of regulatory changes in recent years provides ample opportunity for such studies. However, event studies of regulatory changes present a number of challenges. Analysts must carefully design...

There is an increasing interest in the economic and financial knowledge of the public. Former Federal Reserve Chairmen Greenspan and Bernanke often stressed the importance of improved economic and financial knowledge of the general public. Using recent survey results from the 2012 National...

Volatile gasoline prices are frequently mentioned in the press. Using more than thirty years of consumer sentiment data, we analyze the relationship between changes in gasoline prices and its impact on consumer sentiment. We find a negative relationship between changes in gasoline prices and its...

Corporate bond interest rates are a subject of concern to investment analysts, corporate financial managers, and scholars. In this article the yield spreads between corporate bonds and government bonds, and between differing quality corporate bonds is examined during recent decades. Also, the...

Estimation of a corporation's cost of equity is crucial for various financial analyses. One area in which it is necessary is in rate of return regulation. In order for the regulator to set an appropriate rate of return, the corporation's cost of equity must be estimated accurately. This article...

Over the years, many stocks in emerging industries, with hindsight, have been overvalued. Stock prices relative to revenue, earnings, book values, or other measures often do not seem consistent with fundamental value. I illustrate a model in which the overvaluation of stocks is not necessarily...

The equity risk premium (ERP) is used to estimate a firm's cost of equity and overall cost of capital. It therefore is relevant to, for example, capital budgeting analyses and calculation of economic value added. Unfortunately, current estimates of the ERP range widely. Some claim it has fallen...

The standard discounted dividend model provides flawed estimates of the cost of equity when corporations repurchase shares, which many now do. A simulation model shows that the discounted dividend model, as customarily applied, will lead to cost of equity estimates that are too low. A corrected...