Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments August 6, 2020 erstellt
Description:
We show that the implied cost of capital (ICC) and factor model-based proxies (FMPs) of cost of equity have negative (positive) association with corporate investment and external financing. ICCs show negative association with corporate investment and external financing by capturing the discount rate news. Such relationship is pronounced in firms with high private information and external finance dependence. By contrast, FMPs show positive association with corporate investment and external financing by capturing cash flow news which are pronounced in firms with low private information and external finance dependence. Our findings suggest that ICCs and FMPs convey distinctive information for corporate investment and financing decisions in different sets of firms