This paper studies the relation between firm value and a firm's growth options. We find strong empirical evidence that (average) Tobin's Q increases with firm-level volatility. The significance mainly comes from R&D firms, which have more growth options than non-R&D firms. By decomposing...

According to the Treasury Department, a principal piece of evidence of the existence of a corporate tax shelter problem is the faster recent growth of corporate book income relative to taxable income. This paper attempts to determine whether, and to what extent, increased stock option activity...