IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v52y2016i10p2348-2363.html
   My bibliography  Save this article

A New Perspective on the International Evidence Concerning the Book-Price Effect

Author

Listed:
  • James Foye
  • Dušan Mramor

Abstract

Finance theory implies equity returns should be positively related to financial leverage. However, a recent article decomposes the book-price ratio into financing and operating components and report a negative association between financial leverage and returns. We shed new light on this puzzle by examining a region in which previous research has established that firms’ financial leverage choices are motivated by factors other than maximizing shareholders’ wealth: we hypothesize that this must be reflected in both how financial leverage is priced and the book-price ratio. We show that the relationship between equity returns and financial leverage for stocks in our sample is indeed very different to the findings of previous research, and this is reflected in the decomposed elements of the book-price ratio.

Suggested Citation

  • James Foye & Dušan Mramor, 2016. "A New Perspective on the International Evidence Concerning the Book-Price Effect," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(10), pages 2348-2363, October.
    • Handle: RePEc:mes:emfitr:v:52:y:2016:i:10:p:2348-2363
    DOI: 10.1080/1540496X.2015.1070630
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2015.1070630
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1540496X.2015.1070630?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hartwell, Christopher A. & Malinowska, Anna P., 2019. "Informal institutions and firm valuation," Emerging Markets Review, Elsevier, vol. 40(C), pages 1-1.
    2. Kofi Mintah Oware & T. Mallikarjunappa, 2023. "Financial Performance and Gender Diversity: The Moderating and Mediating Effect of CSR Disclosure and Expenditure of Listed Firms in India," Vision, , vol. 27(2), pages 243-255, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:emfitr:v:52:y:2016:i:10:p:2348-2363. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.