
Equity Performance, Leverage and Overinvestment
The measurement of equity performance and its impact on the relationship between leverage and overinvestment
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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.