Hertzel, Michael G.; Li, Zhi - In: Journal of Financial and Quantitative Analysis 45 (2010) 04, pp. 935-958
We examine the extent to which investment opportunities and/or mispricing motivate equity issuance and contribute to post-issue stock underperformance. We decompose market-to-book ratios into misvaluation and growth option components and find that issuing firms are both overvalued and have...