What Does the CAPM Say About Operating Leverage?
Date
2020
Authors
Linnenluecke, Martina K
Shen, Yun
Smith, Tom
Zhu, Yushu
Liang, Zixin
Journal Title
Journal ISSN
Volume Title
Publisher
University of Sydney Press
Abstract
We examine the issue of operating leverage and firm value. Johnstone(2020), in this issue, questions existing results which indicate that higheroperating leverage results in lower firm value. We agree with Johnstone(2020) that this result is to be questioned and present a number ofarguments which indicate that operating leverage is irrelevant to thevaluation of the firm in the context of the CAPM model.
Description
Keywords
CAPM, Operating leverage, Value irrelevance, Real options
Citation
Collections
Source
Abacus
Type
Journal article
Book Title
Entity type
Access Statement
License Rights
Restricted until
2099-12-31
Downloads
File
Description