We study the dynamic implications of capital investment in innovative capacity (IC) on future stock returns, investment, and profitability by modeling the unique effects of IC investment on uncertain option generation/exercise and post-exercise revenue. The model highlights the diverse effects...

We study the dynamic implications of capital investment in innovative capacity (IC) on future stock returns, investment, and profitability by modeling the unique effects of IC investment on uncertain option generation/exercise and post-exercise revenue. The model highlights the diverse effects...

This paper presents a framework to help decisions makers better measure the opportunity cost of resources with different granularity. We characterize resources by the intrinsic lumpiness of acquisition (acquisition granularity), storability of benefits (expiration granularity), and control over...

We examine the effects of estimation risk and Bayesian learning on equilibrium asset prices when there is uncertainty about both the first and second moments of consumption and dividend growth rates. For the 1891-2007 period, our model generates a sizable average annual equity premium,...

We use a change in US trade policy, which eliminated potential tariff increases on Chinese imports, to examine the effect of resolution of trade policy uncertainty on merger and acquisition (M&A) activity and shareholder value of acquiring and target firms. After this policy change, industries...