Growth Opportunities and Technology Shocks
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Kogan_Growth Opportunities.pdf
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Author(s)
Kogan, Leonid
Papanikolaou, Dimitris
Date Issued
May 2010
Journal
American Economic Review
Publisher
American Economic Association
Citation
Kogan, Leonid, and Dimitris Papanikolaou. 2010. "Growth Opportunities and Technology Shocks." American Economic Review: Papers & Proceedings, 100(2): 532–36. © 2010 AEA.
Version
Final published version
Abstract
We propose a theoretically motivated procedure
for measuring heterogeneity in firms’
growth opportunities and document its empirical
properties. The term “growth opportunities”
refers to the component of a firm’s market
value that cannot be attributed to its assets in
place. This decomposition of firm value underpins
many of the theoretical models describing
cross-sectional differences in firms’ investment
and stock return behavior. However, successful
applications of such models depend on the
quality of empirical measures of growth opportunities.
Our procedure identifies economically
significant differences in firms’ growth opportunities
which are not captured by the commonly
used empirical measures.
MIT Department
Program in Media Arts and Sciences (Massachusetts Institute of Technology)
Sloan School of Management
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/aer.100.2.532
