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Real and Financial Industry Booms and Busts / Gerard Hoberg, Gordon M. Phillips.
- Format:
- Book
- Author/Creator:
- Hoberg, Gerard.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w14290.
- NBER working paper series no. w14290
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2008.
- Summary:
- We examine how product market competition affects firm cash flows and stock returns in industry booms and busts. In competitive industries, we find that high industry-level stock-market valuation, investment and new financing are followed by sharply lower operating cash flows and abnormal stock returns. We also find that analyst estimates are positively biased and returns comove more when industry valuations are high in competitive industries. In concentrated industries these relations are weak and generally insignificant. Our results suggest that when industry stock-market valuations are high, firms and investors in competitive industries do not fully internalize the negative externality of industry competition on cash flows and stock returns.
- Notes:
- Print version record
- August 2008.
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