We conduct interviews with financial managers in Australia, Canada, the U.K., and the U.S. to study the question why companies issue convertible bonds. For the vast majority of the firms, convertible bonds are chosen because managers find straight debt too costly. Convertible bonds are preferred...

This paper discusses the importance of the pricing factors and multi-factor asset pricing models in the relative valuation approach in corporate valuation. We examine the valuation performance of multiples estimated in regressions with pricing factor variables, and we compare it to the...

Despite the mounting evidence that stock misvaluation affects takeover characteristics and outcomes at the deal level, there remains a prolonged debate over whether mispricing drives aggregate industry-level merger activity. We depart from the extant literature and investigate whether stock...

We examine the relation between an ex ante measure of IPO growth prospects – the industry-level long-term analyst earnings growth forecast – and short- and long-run IPO returns, using a sample of 7,570 IPOs from 1982 to 2007. The use of an industry-level, rather than firm-level growth...

We present evidence from an event study that runs counter to the notion that the momentum and book-to-market (B/M) effects can be fully explained by time-varying risk premia. We minimize the joint hypothesis problem in market-efficiency tests by examining a relatively short (26-day) window that...

We test how market overvaluation affects corporate innovation. Estimated stock overvaluation is very strongly associated with R&D, innovative output, and measures of innovative novelty, originality, and scope. R&D is much more sensitive than capital investment to overvaluation. Misvaluation...

These are the presentation slides for the working paper. We test how market overvaluation affects corporate innovation. Estimated stock overvaluation is very strongly associated with R&D, innovative output, and measures of innovative novelty, originality, and scope. R&D is much more sensitive...