What Does the CAPM Say About Operating Leverage?

• Linnenluecke, Martina K. ^[1] ; Smith, Tom ^[1] ; Shen, Yun ^[1] ; Zhu, Yushu ^[2] ; Liang, Zini ^[3]
  1. [1] Macquarie University

     Macquarie University

     Australia

     
  2. [2] University of Queensland

     University of Queensland

     Australia

     
  3. [3] Australian National University

     Australian National University

     Australia

     

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• Localización: Abacus: A journal of accounting, finance and business studies, ISSN 0001-3072, Vol. 56, Nº 2, 2020, págs. 288-291
• Idioma: inglés
• DOI: 10.1111/abac.12198
• Texto completo no disponible (Saber más ...)
• Resumen

  • We examine the issue of operating leverage and firm value. Johnstone (2020), in this issue, questions existing results which indicate that higher operating leverage results in lower firm value. We agree with Johnstone (2020) that this result is to be questioned and present a number of arguments which indicate that operating leverage is irrelevant to the valuation of the firm in the context of the CAPM model. [ABSTRACT FROM AUTHOR]