publication . Article . 2007

Stock prices and business investment

Yaron Leitner;
Open Access
  • Published: 01 Jan 2007
Is there a link between the stock market and business investment? Empirical evidence indicates that there is. A firm tends to invest more when its stock price increases, and it tends to invest less when the price falls. In “Stock Prices and Business Investment,” Yaron Leitner discusses existing research that explains this relationship. One question under consideration is whether the stock market actually improves investment decisions.
free text keywords: Stock - Prices ; Investments

Baker Malcolm, Jeremy C. Stein, and Jeffrey Wurgler. “When Does the Market Matter? Stock Prices and the Investment of Equity-Dependent Firms,” Quarterly Journal of Economics, 118 (2003), pp. 969- 1005.

“Price Informativeness and Investment Sensitivity to Stock Price,” Review of Financial Studies, 20:3 (2007), pp. 619-50.

Durnev, Artyom, Randall Morck, Bernard Yeung, and Paul Zarowin. “Does Greater Firm-Specific Return Variation Mean More or Less Informed Stock Pricing?,” Journal of Accounting Research, 41 (2003), pp. 797-836. [OpenAIRE]

Easley, David, Nicholas M. Kiefer, and Maureen O'Hara. “Cream-Skimming or Profit-Sharing? The Curious Role of Purchased Order Flow,” Journal of Finance, 51 (1996), pp. 811-33. [OpenAIRE]

Easley, David, Nicholas M. Kiefer, and Maureen O'Hara. “One Day in the Life of a Very Common Stock,” Review of Financial Studies, 10 (1997), pp. 805-35. [OpenAIRE]

Milgrom. “Bid, Ask and Transaction Prices in a Specialist Market with Heterogeneously Informed Traders,” Journal of Financial Economics, 14 (1985), pp. 71-100.

Kyle, Albert S. “Continuous Auctions and Insider Trading,” Econometrica, 53 (1985), pp. 1315-35.

Myers, Stewart C. “The Capital Structure Puzzle,” Journal of Finance, 39 (1984), pp.

Roll, Richard, “R2,” Journal of Finance, 43 (1988), pp. 541-66.

Shiller, Robert J. Irrational Exuberance, 2nd ed. Princeton, NJ: Princeton University Press, 2005.

Powered by OpenAIRE Open Research Graph
Any information missing or wrong?Report an Issue