Are stock market crashes and rallies related to deviations from the apparent fundamental share price? Using a switching-regression framework, the authors test whether apparent deviations help to predict the regime from which the next period's stock market return is drawn and the magnitude of...

Financing constraints can arise when there are important information asymmetries in financial markets. Using Canadian panel data, the authors reject a symmetric information specification of investment behavior in favor of an agency cost specification in which the shadow cost of finance can...