Journal ArticleJournal of Financial Economics · April 1, 2026
CFOs report using elevated hurdle rates that average 6.6 percentage points above the cost of capital. We show that hurdle rate buffers act as a commitment device and convey a bargaining advantage over counterparties during project development and M&A. This ...
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Journal ArticleEconomics Letters · November 1, 2024
We investigate how the COVID-19 pandemic affected CFOs’ self-assessed uncertainty about revenue growth and its impact on investment and hiring plans, using data from two consecutive surveys of the same CFOs conducted before and during the pandemic. Followi ...
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Journal ArticleJournal of Finance · August 1, 2023
An employee's annual earnings fall by 13% in the first full calendar year after her firm's bankruptcy, and the present value of lost earnings from bankruptcy to six years following bankruptcy is 87% of pre-bankruptcy annual earnings. More worker earnings a ...
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Journal ArticleJournal of Financial Economics · November 1, 2022
Ninety-two percent of the 1348 North American executives we survey believe that improving corporate culture would increase firm value. A striking 84% believe their company needs to improve its culture. But how can that be achieved? Our paper provides some ...
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Journal ArticleJournal of Accounting Research · September 1, 2022
We examine whether the Securities Exchange Act of 1934 increased the information content of corporate earnings disclosures. Prior research questions whether the Act improved disclosure quality but generally relies on long-window tests and yields mixed resu ...
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Journal ArticleJournal of Finance · August 1, 2022
This paper uses surveys to document CFO perspectives on corporate planning, investment, capital structure, payout, and shareholder versus stakeholder focus. Comparing policy decisions today to those 20 years ago, I find that companies employ decision rules ...
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Journal ArticleJournal of Financial Economics · June 1, 2022
We use the COVID shock to study the direct and interactive effects of several forms of corporate flexibility on short- and long-term real business plans. We find that i) workplace flexibility, namely the ability for employees to work remotely, plays a cent ...
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Journal ArticleJournal of Financial Economics · September 1, 2020
We examine CEO-board dynamics using a new panel dataset that spans 1920 to 2011. The long sample allows us to perform within-firm and within-CEO tests over a long horizon, many for the first time in the governance literature. Consistent with theories of ba ...
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Journal ArticleManagement Science · November 1, 2019
Why do firms manage risk? According to various theories, firms hedge to mitigate credit rationing, to alleviate information asymmetry, and to reduce the risk of financial distress. However, empirical support for these theories is mixed. Our paper addresses ...
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Journal ArticleFinancial Management · December 1, 2018
We survey more than 1,100 risk managers from around the world regarding their risk management policies. We find evidence consistent with some traditional theories of risk management, but not with all. We then study “why” or “why not” firms hedge and find t ...
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Journal ArticleReview of Financial Studies · November 1, 2018
We study time-series and cross-firm variation in corporate cash holdings from 1920 to 2014. The recent increase in cash is not unique in magnitude. However, the recent divergence between average and aggregate cash is new and entirely driven by a shift in c ...
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Journal ArticleReview of Financial Studies · September 1, 2017
We survey companies and find that many use incorrect tax rate inputs into important corporate decisions. Specifically, many companies use an average tax rate (the GAAP effective tax rate, ETR) to evaluate incremental decisions, rather than using the theore ...
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Scholarly Edition · September 1, 2017
We provide new evidence that the subjective "look of competence" rather than beauty is important for CEO selection and compensation. Our experiments, studying the facial traits of CEOs using nearly 2,000 subjects, link facial characteristics to both CEO co ...
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Journal ArticleJournal of International Business Studies · May 1, 2017
We explore a long-standing prediction in the international business literature that managers' subjective perceptions of political risk - not just the level of risk - are important for how firms manage political risk. The importance attributed to political ...
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Journal ArticleJournal of Applied Corporate Finance · December 2016
In a study published recently in the Journal of Financial Economics, the authors of this article documented a substantial increase in the use of debt financing by U.S. companies over the past century. From 1920 until the ...
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Journal ArticleFinancial Analysts Journal · January 1, 2016
The authors conducted a survey of nearly 400 chief financial officers on the definition and drivers of earnings quality, with an emphasis on the prevalence and detection of earnings misrepresentation. The respondents believe that the hallmarks of earnings ...
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Journal ArticleJournal of Financial Economics · December 1, 2015
Unregulated US corporations dramatically increased their debt usage over the past century. Aggregate leverage-low and stable before 1945-more than tripled between 1945 and 1970 from 11% to 35%, eventually reaching 47% by the early 1990s. The median firm in ...
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Scholarly Edition · March 1, 2015
We use a unique data set that contains information on more than 1,000 Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs) around the world to investigate the degree to which executives delegate financial decisions and the circumstances that ...
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Journal ArticleAccounting Review · January 1, 2014
We analyze survey responses from nearly 600 corporate tax executives to investigate firms' incentives and disincentives for tax planning. While many researchers hypothesize that reputational concerns affect the degree to which managers engage in tax planni ...
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Scholarly Edition · November 1, 2013
Using a unique 10-year panel that includes more than 13,300 expected stock market return probability distributions, we find that executives are severely miscalibrated, producing distributions that are too narrow: realized market returns are within the exec ...
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Journal ArticleJournal of Financial Economics · July 1, 2013
We administer psychometric tests to senior executives to obtain evidence on their underlying psychological traits and attitudes. We find US CEOs differ significantly from non-US CEOs in terms of their underlying attitudes. In addition, we find that CEOs ar ...
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Journal ArticleJournal of Financial Economics · January 1, 2013
We study the capital investment, stock issuance, and cash savings behavior of non-tech manufacturers (old economy firms) during the 1990s technology bubble. Our empirical results show that high stock prices affect corporate policies because they relax fina ...
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Journal Article · January 1, 2013
This chapter reviews tax research related to whether corporate and personal taxes affect domestic and multinational capital structure, debt maturity, payout policy, compensation policy, risk management, earnings management, leasing, pensions, R&D partnersh ...
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Journal ArticleFoundations and Trends in Finance · December 1, 2012
This monograph comprehensively reviews the Accounting for Income Taxes (AFIT) literature. We begin by identifying four distinctive aspects of AFIT. We cover the rules surrounding AFIT and provide a discussion of the descriptive studies related to AFIT. We ...
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Journal ArticleJournal of Accounting and Economics · November 2, 2012
We provide insights into earnings quality from a survey of 169 CFOs of public companies and in-depth interviews of 12 CFOs and two standard setters. CFOs believe that (i) above all, high-quality earnings are sustainable and repeatable; specific characteris ...
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Journal ArticleReview of Finance · April 1, 2012
We use a unique data set to show how firms in Europe used credit lines during the financial crisis. We find that firms with restricted access to credit (small, private, non-investment-grade, and unprofitable) draw more funds from their credit lines during ...
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Journal ArticleJournal of Accounting and Economics · February 1, 2012
This paper comprehensively reviews the Accounting for Income Taxes (AFIT) literature. We begin by identifying four distinctive aspects of AFIT and briefly covering the rules surrounding AFIT. We then review the existing studies in detail and offer suggesti ...
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Book · 2012
This book's accessible, inviting approach gives finance majors the solid foundation they need while remaining relevant to the large number of non-majors in your course. ...
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Journal ArticleReview of Financial Studies · January 1, 2012
We study the role of firm- and manager-specific heterogeneities in executive compensation. We decompose the variation in executive compensation and find that time-invariant firm and, especially, manager fixed effects explain a majority of the variation in ...
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Journal ArticleJournal of Applied Corporate Finance · December 2011
The authors provide a reasonably user‐friendly and intuitive model for arriving at a company's optimal, or value‐maximizing, leverage ratio that is based on the estimation of company‐specific cost and benefit functions for debt financing. The benef ...
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Journal ArticleManagement Science · December 1, 2011
We study a period of severe disequilibrium to investigate whether board characteristics are related to corporate investment, debt usage, and firm value. During the 1930-1938 Depression era, when the corporate sector was shocked by an unprecedented downturn ...
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Journal ArticleFinancial Management · December 1, 2011
We use firm-level data to study corporate performance during the Great Depression era for all industrial firms on the NYSE. Our goal is to identify the factors that contribute to business insolvency and valuation changes during the period 1928-1938. We fin ...
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Journal ArticleAnnual Review of Financial Economics · November 16, 2011
This article reviews empirical capital structure research, concentrating on papers published since 2005. We begin by documenting three dimensions of capital structure variation: cross firm, cross industry, and within firm through time. We summarize how wel ...
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Journal ArticleReview of Financial Studies · June 1, 2011
This article uses a unique dataset to study how firms managed liquidity during the 2008-2009 financial crisis. Our analysis provides new insights on interactions between internal liquidity, external funds, and real corporate decisions, such as investment a ...
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Journal ArticleFinancial Review · May 1, 2011
This article is based on the keynote address from the Eastern Finance Associationmeeting in South Beach in April 2010. In this keynote address, I discuss how to engage and motivate students by using the results from surveys of corporate finance professiona ...
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Journal ArticleJournal of Accounting Research · March 1, 2011
We analyze survey responses from nearly 600 tax executives to better understand corporate decisions about real investment location and profit repatriation. Our evidence indicates that avoiding financial accounting income tax expense is as important as avoi ...
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Journal ArticleJournal of Finance · December 1, 2010
We use exogenous variation in tax benefit functions to estimate firm-specific cost of debt functions that are conditional on company characteristics such as collateral, size, and book-to-market. By integrating the area between the benefit and cost function ...
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Journal ArticleJournal of Financial Economics · September 1, 2010
We survey 1,050 Chief Financial Officers (CFOs) in the U.S., Europe, and Asia to directly assess whether their firms are credit constrained during the global financial crisis of 2008. We study whether corporate spending plans differ conditional on this sur ...
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Journal ArticleReview of Financial Studies · February 1, 2010
Campbell, Lettau, Malkiel, and Xu (2001) document a positive trend in idiosyncratic volatility during the 1962-1997 period. We show that by 2003 volatility falls back to pre-1990s levels. Furthermore, we show that the increase and subsequent reversal is co ...
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Journal ArticleNational Tax Journal · January 1, 2010
Using data from a survey of tax executives, we examine the corporate response to the one-time dividends received deduction in the American Jobs Creation Act of 2004. We describe the firms' reported sources and uses of the cash repatriated and we also exami ...
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Journal ArticleNational Tax Journal · 2010
Using data from a survey of tax executives, we examine the corporate response to the one-time dividends received deduction in the American Jobs Creation Act of 2004. We describe the firms' reported sources and uses of the cash repatriated and we also exami ...
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Book · September 28, 2009
Each chapter in this edition now integrates the latest results from Duke University's prestigious CFO Global Business Outlook, a quarterly survey of financial executives that gauges business outlook and topical economic issues. ...
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Journal ArticleManagement Science · July 1, 2009
People are more willing to bet on their own judgments when they feel skillful or knowledgeable. We investigate whether this "competence effect" influences trading frequency and home bias. We find that investors who feel competent trade more often and have ...
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Journal ArticleNational Tax Journal · January 1, 2009
We investigate how the length of the net operating loss carryback period affects corporate liquidity and marginal tax rates. We estimate that extending the carryback period from two to five years, as recently proposed in President Obama's budget blueprint, ...
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Journal ArticleFinancial Management · December 1, 2008
We survey 328 financial executives to determine the effects of the May 2003 dividend tax cut. We find that the tax cut led to initiations and dividend increases at some firms. However, executives say that among the factors that affect dividend policy, the ...
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Journal ArticleJournal of Accounting and Economics · December 1, 2008
We document that simulated corporate marginal tax rates based on financial statement data [Shevlin, T., 1990. Estimating corporate marginal tax rates with asymmetric tax treatment of gains and losses. The Journal of the American Taxation Association 11, 51 ...
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Journal ArticleJournal of Financial Economics · July 1, 2008
This paper is the first to study the effect of financial restatement on bank loan contracting. Compared with loans initiated before restatement, loans initiated after restatement have significantly higher spreads, shorter maturities, higher likelihood of b ...
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Journal ArticleNational Tax Journal · January 1, 2008
We analyze the impact of the May 2003 dividend tax cut on corporate dividend policy. First, we find that while there was a temporary increase in dividend initiations, this increase was not long-lasting. While dividend payments were increased right after th ...
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Journal Article · January 1, 2008
This chapter reviews tax research related to domestic and multinational capital structure, debt maturity, payout policy, compensation policy, risk management, earnings management, leasing, pensions, R&D partnerships, tax shelters, transfer pricing, and org ...
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Journal ArticleFinancial Analysts Journal · November 1, 2006
The comprehensive survey reported here allowed analysis of how senior U.S. financial executives make decisions related to performance measurement and voluntary disclosure. Chief financial officers were asked what earnings benchmarks they cared about and wh ...
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Journal ArticleJournal of Business · September 1, 2006
We study dividend announcements, conditioning on whether the timing of the announcement is anticipated. We find that liquidity deteriorates before (after) anticipated (unanticipated) announcements. We identify both timing and content effects and also contr ...
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Journal ArticleJournal of Financial Economics · September 1, 2006
We gather a unique sample of 44 tax shelter cases to investigate the magnitude of tax shelter activity and whether participating in a shelter is related to corporate debt policy. The average annual deduction produced by the shelters in our sample is very l ...
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Journal ArticleJournal of Finance · June 1, 2006
We study stock holdings and trading behavior of more than 60,000 households and find evidence consistent with dividend clienteles. Retail investor stock holdings indicate a preference for dividend yield that increases with age and decreases with income, co ...
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Journal ArticleFinance Research Letters · December 1, 2005
Based on a survey of US Chief Financial Officers (CFOs), we present expectations of the equity risk premium measured over a 10-year horizon relative to a 10-year US Treasury bond. This multi-year survey has been conducted each quarter from June 2000 to Jun ...
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Journal ArticleFoundations and Trends in Finance · December 1, 2005
This paper reviews domestic and multinational corporate tax research. For each topic, the theoretical arguments explaining how taxes can affect corporate decision-making and firm value are reviewed, followed by a summary of the related empirical evidence a ...
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Journal ArticleJournal of Financial Economics · September 1, 2005
We survey 384 financial executives and conduct in-depth interviews with an additional 23 to determine the factors that drive dividend and share repurchase decisions. Our findings indicate that maintaining the dividend level is on par with investment decisi ...
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Journal ArticleJournal of Accounting and Economics · January 1, 2005
We survey and interview more than 400 executives to determine the factors that drive reported earnings and disclosure decisions. We find that managers would rather take economic actions that could have negative long-term consequences than make within-GAAP ...
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Journal ArticleJournal of Finance · August 1, 2004
We find that employee stock option deductions lead to large aggregate tax savings for Nasdaq 100 and S&P 100 firms and also affect corporate marginal tax rates. For Nasdaq firms, including the effect of options reduces the estimated median marginal tax rat ...
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Journal ArticleReview of Financial Studies · January 1, 2003
This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and organizational form. For each topic, the theoretical arguments explaining how taxes can affect corporate dec ...
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Journal ArticleJournal of Finance · January 1, 2003
By the end of January 2001, all NYSE stocks had converted their price quotations from 1/8s and 1/16s to decimals. This study examines the effect of this change in price quotations on ex-dividend day activity. We find that abnormal ex-dividend day returns i ...
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Journal ArticleReview of Financial Studies · 2003
This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and organizational form. For each topic, the theoretical arguments explaining how taxes can affect corporate dec ...
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Journal ArticleJournal of Finance · January 1, 2002
There are two tax incentives for corporations to hedge: to increase debt capacity and interest tax deductions, and to reduce expected tax liability if the tax function is convex. We test whether these incentives affect the extent of corporate hedging with ...
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Journal ArticleJournal of Finance · January 1, 2002
We analyze several hundred firms that expand via acquisition and/or increase their number of business segments. The combined market reaction to acquisition announcements is positive but acquiring firm excess values decline after the diversifying event. Muc ...
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Journal ArticleJournal of Financial Economics · May 1, 2001
We survey 392 CFOs about the cost of capital, capital budgeting, and capital structure. Large firms rely heavily on present value techniques and the capital asset pricing model, while small firms are relatively likely to use the payback criterion. A surpri ...
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Journal ArticleJournal of Applied Corporate Finance · March 2001
The standard approach to valuing interest tax shields assumes that full tax benefits are realized on every dollar of interest deduction in every scenario. The approach presented in this paper takes account of the possibility that interest tax shiel ...
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Journal ArticleJournal of Applied Corporate Finance · January 2000
If a company faces some form of tax progressivity—that is, its marginal tax rate increases over the firm's expected range of reported taxable income—corporate hedging can reduce the firm's expected tax liability by reducing the volatility of pre‐ta ...
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Journal ArticleJournal of Finance · January 1, 2000
I integrate under firm-specific benefit functions to estimate that the capitalized tax benefit of debt equals 9.7 percent of firm value (or as low as 4.3 percent, net of personal taxes). The typical firm could double tax benefits by issuing debt until the ...
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Journal ArticleJournal of Public Economics · August 1, 1999
The traditional view is that interest deductibility encourages firms to use debt financing; however, some argue that the personal tax disadvantage to interest offsets the corporate tax advantage. This paper investigates the degree to which personal taxes a ...
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Journal ArticleJournal of Finance · January 1, 1999
For corporations facing tax-function convexity, hedging lowers expected tax liabilities, thereby providing an incentive to hedge. We use simulation methods to investigate convexity induced by tax-code provisions. On average, the tax function is convex (alt ...
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Journal ArticleJournal of Finance · January 1, 1999
A model is developed which implies that if an analyst has high reputation or low ability, or if there is strong public information that is inconsistent with the analyst's private information, she is likely to herd. Herding is also common when informative p ...
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Journal ArticleJournal of Applied Corporate Finance · March 1998
Taxes play an important but underemphasized role in the valuation of a company and its projects. For example, the authors estimate that the expected tax benefits from interest deductions by all publicly traded U.S. corporations were responsible for ...
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Journal ArticleJournal of Finance · January 1, 1998
We provide evidence that corporate tax status is endogenous to financing decisions, which induces a spurious relation between measures of financial policy and many commonly used tax proxies. Using a forward-looking estimate of before-financing corporate ma ...
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Journal ArticleFinancial Analysts Journal · January 1, 1997
Many investment newsletters offer market-timing advice; that is, they are supposed to recommend increased stock market weights before market appreciations and decreased weights before market declines. Examination of the performance of 326 newsletter asset- ...
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Journal ArticleJournal of Business · April 1, 1996
Can economists forecast the direction of economic growth? Casual observation indicates that individual economists make poor predictions of economic growth and that their forecasts are highly correlated. This article discusses the loss of information result ...
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Journal ArticleJournal of Financial Economics · January 1, 1996
We analyze the advice contained in a sample of 237 investment newsletter strategies over 1980-1992. Each newsletter strategy recommends a mix of equity and cash. We find no evidence that letters systematically increase equity weights before market rises or ...
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Journal ArticleJournal of Financial Economics · January 1, 1996
This paper focuses on how best to measure the corporate marginal tax rate, which is an important input into financial analysis of the cost of capital, financing policy, corporate hedging, and corporate reorganizations. The results indicate that the simulat ...
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Journal ArticleJournal of Financial Economics · January 1, 1996
Do taxes affect corporate debt policy? This paper tests whether the incremental use of debt is positively related to simulated firm-specific marginal tax rates that account for net operating losses, investment tax credits, and the alternative minimum tax. ...
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