Levered Returns
Publication
, Journal Article
Gomes, JF; Schmid, L
Published in: Journal of Finance
April 1, 2010
This paper revisits the theoretical relation between financial leverage and stock returns in a dynamic world where both corporate investment and financing decisions are endogenous. We find that the link between leverage and stock returns is more complex than static textbook examples suggest, and depends on the investment opportunities available to the firm. In the presence of financial market imperfections, leverage and investment are generally correlated so that highly levered firms are also mature firms with relatively more (safe) book assets and fewer (risky) growth opportunities. A quantitative version of our model matches several stylized facts about leverage and returns. © 2010 the American Finance Association.
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Published In
Journal of Finance
DOI
EISSN
1540-6261
ISSN
0022-1082
Publication Date
April 1, 2010
Volume
65
Issue
2
Start / End Page
467 / 494
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
Citation
APA
Chicago
ICMJE
MLA
NLM
Gomes, J. F., & Schmid, L. (2010). Levered Returns. Journal of Finance, 65(2), 467–494. https://doi.org/10.1111/j.1540-6261.2009.01541.x
Gomes, J. F., and L. Schmid. “Levered Returns.” Journal of Finance 65, no. 2 (April 1, 2010): 467–94. https://doi.org/10.1111/j.1540-6261.2009.01541.x.
Gomes JF, Schmid L. Levered Returns. Journal of Finance. 2010 Apr 1;65(2):467–94.
Gomes, J. F., and L. Schmid. “Levered Returns.” Journal of Finance, vol. 65, no. 2, Apr. 2010, pp. 467–94. Scopus, doi:10.1111/j.1540-6261.2009.01541.x.
Gomes JF, Schmid L. Levered Returns. Journal of Finance. 2010 Apr 1;65(2):467–494.
Published In
Journal of Finance
DOI
EISSN
1540-6261
ISSN
0022-1082
Publication Date
April 1, 2010
Volume
65
Issue
2
Start / End Page
467 / 494
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment