We construct a model to illustrate the dynamics of cash flow volatility and firm valuation. As a firm progressively invests into its growth opportunities, its book value increases and catches up with its market value, reducing the valuation multiple (Q). Cash flow volatility (CFV) decreases due...

Managers whose equity-based incentives vest over a shorter time horizon appear to adopt strategies that reduce information environment quality and exacerbate information heterogeneity across investors. Firms with shorter-horizon managerial incentives are more likely to inflate reported earnings...

When large numbers of people are enabled to travel rapidly around the country, will it affect information production in capital markets? We study a government-directed buildout of high-speed rails (HSR) and find that after being connected to the HSR network, firms experience increased...

Cash holdings and bank credit lines are the main sources of corporate liquidity. Similar to the prediction for cash holdings, theory predicts that when facing more intense product market competition, a firm should use more credit lines. The liquidity provided by a credit line allows a firm to...