Firms with similar credit ratings, especially junk-rated ones, tend to comove strongly with each other in stock returns. Following a firm’s downgrade to junk grade, it tends to comove more strongly with other junk-rated firms and less with investment-rated ones, which cannot be fully explained...

With the rapid growth of information technology (IT), intangible capital accumulated through investment in Research and Development and other expensed investment becomes an increasingly important component of productive assets. However, under the current U.S. accounting standards, most of the...