We examine a firm's price-to-earnings (P/E) and price-to-book (P/B) ratios in a model of sequential capacity investments. Our analysis focuses on several key variables, including past and anticipated future investment growth, economic profitability and accounting conservatism, which jointly...

Under rate-of-return regulation, a firm's product prices are constrained by the requirement that investors not earn more than an allowable return on the firm's assets. This paper examines the dynamic properties of the rate-of-return regulation process when the regulated firm periodically...

This note provides the proof of proposition 5 in our paper titled "Dynamics of Rate-of-Return Regulation."

Under Rate-of-Return regulation, a firm's product prices are constrained by the requirement that investors do not earn more an allowable return on the firm's assets. This paper examines the dynamic properties of the Rate-of-Return regulation process when the regulated firm periodically...

My dissertation aims to explain a number of empirical findings about valuation and performance of diversified firms using the model of optimal diversification. It contains two chapters. The first chapter of the dissertation proposes a model of optimally diversified firm and shows that the main...

regarding leverage ratios and announcement effects, and can also explain observed violations of the pecking-order hypothesis.

We consider optimal incentive contracts when managers can, in addition to shirking or diverting funds, increase short term profits by putting the firm at risk of a low probability "disaster." To avoid such risk-taking, investors must cede additional rents to the manager. In a dynamic context,...