Value maximization and the information content of corporate investment with respect to earnings

Article Abstract:

The vector error correction model (VECM) has been used to analyze the dynamic relationship of earnings and investment. Since the model demonstrated the changes in earnings and capital expenditures it was found that the error correction term has insignificant impact on the test of causality from earnings to capital expenditures. This led to the conclusion that earnings and investments manifest bi-directional causality, and further confirmed the concept that managers act as value maximizers and that they are often faced with financial constraints when making investment decisions.

Models, Analysis, Investments, Income, Causation, Causation (Philosophy)

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Time-varying risk aversion and asset prices

Article Abstract:

The correlation between risk aversion, risk premium, stock prices, unpredictability in asset returns, and hence, the overall stock market behavior, is discussed.

Economic aspects, Stock markets, Stock market, Risk aversion, Market risk, Return on assets

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An empirical evaluation of the overconfidence hypothesis

Article Abstract:

Implications of overconfidence hypothesis of behavioral finance in studying stock returns trends are examined.

Science & research, Financial Systems & Controls, Research, Usage, Hypothesis testing (Research method)

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