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Firm Optimization across Capital Forms

Author

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  • Lee, Woongki

    (Yonsei University)

Abstract

This study derives a model of firm optimization across capital forms and incorporates the resulting optimality conditions into asset pricing. The structure of the problem depends on how profitability is modeled. When profitability is endogenous, optimization is grounded in production decisions; when profitability is exogenous, it is organized around operating profit. These alternative assumptions yield two asset pricing frameworks, each with a factor representation derived from the firm’s decision margins. By relating these representations to established pricing factors, the study provides a structured economic basis for reinterpreting established factors through firm optimization.

Suggested Citation

  • Lee, Woongki, 2026. "Firm Optimization across Capital Forms," SocArXiv 4pysq_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:4pysq_v1
    DOI: 10.31235/osf.io/4pysq_v1
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