Equity Performance, Leverage and Overinvestment

This book discusses the relationship between equity performance, over-investment and leverage for UK and US markets. At the first stage, this book explaines that the Residual Income Model (RI) outperomes other methods such as the Discounted Cash Flows Models (DCF). Further, this book explaines the non-linearilty relationship between leverage and overinvestment and conclude that leverage, at a moderate level, can dicipline managers and mitigate the over-invetsment problem.

Autorentext

Dr. Hassan Hamadi is a full assistant professor at Note Dame University Lebanon. He holds a PhD. in Finance from Surrey University UK. His research and consulting area are: Corporate Finance, Private Equity, Performance and Valuation.

Klappentext

This book discusses the relationship between equity performance, overinvestment and leverage for UK and US markets. This book shows that the Residual Income Model outperforms other valuation models such as the Discounted Cash Flows models. Further, this book introduces a simple way of measuring the overinvestment problem. Moreover, this book explains the non-linearity relationship between leverage and overinvestment and concludes that leverage, at a moderate level, can discipline managers and mitigate the overinvestment problem.