We propose a dynamic structural corporate model in which firms face imperfect capital markets and frictional product markets. We highlight the importance of the endogeneity of firms’ short-term cash flows and the endogeneity of the marginal value of liquidity in determining the interactions between investment, financing and product price setting decisions. Our primary goal is to develop a finan...

Predictive relations motivated by financial theory should hold at least for the majority of the data, but they can be violated by a small fraction of the data. Conventional testing approaches can fail to detect predictive relations that hold for the vast majority of the data, because rare anomalous observations can have an excessive influence on the results. We propose a novel robust method for...

The characteristics of the distribution of security returns, such as skewness, play a significant role in financial theory and practice. This paper examines whether conditional skewness of daily aggregate market returns is predictable and investigates the economic mechanisms underlying this predictability. In both developed and emerging markets, there is strong evidence that lagged returns pred...

Determining whether investments in information technology (IT) have an impact on firm performance has been and continues to be a major problem for information systems researchers and practitioners. Financial theory suggests that managers should make investment'decisions that maximize the value of the firm. Using event-study methodology, we provide empirical evidence on the effect of announcemen...

The benefits of portfolio diversification is a central tenet implicit to modern financial theory and practice. Linked to diversification is the notion of breadth. Breadth is correctly thought of as the number of independent bets available to an investor. Conventionally applications using breadth frequently assume only the number of separate bets. There may be a large discrepancy between these t...

Beach recreation values are often needed by policy-makers and resource managers to efficiently manage coastal resources, especially in popular coastal areas like Southern California. This article presents welfare values derived from random utility maximization-based recreation demand models that explain an individual’s decisions about whether or not to visit a beach and which beach to visit. Th...

Problem statement: In most of the earlier inventory models, effect of inflation has been ignored, which is playing pilot role in present environment. In this article, we have proposed an economic order quantity model for deteriorating items having stock dependent demand (whose demand varies with the stock) under the effect of inflation. Approach: Firstly, problem is framed in the form of linear...

The choice of an overall discount rate for climate change investments depends critically on how di¤erent components of investment payo¤s are discounted at di¤ering rates re‡ecting their underlying risk characteristics. Such underlying rates can vary enormously, from 1% for idiosyncratic diversi…able risk to 7% for systematic nondiversi…able risk. Which risk-adjusted rate is chosen can have a hu...