In this review we survey the recent research on the fundamental determinants of stock returns. These studies explore how firms' systematic risk and their investment and production decisions are jointly determined in equilibrium. Models with production provide insights into several types of...

New theories have emerged over the past 10 years that reveal CEFs to be an important and efficient organizational device. This review surveys the old and current literature on closed-end funds (CEFs) in general and theories of discounts in particular. Among the topics reviewed are liquidity...

We review the literature on return and cash-flow growth predictability from the perspective of the present-value identity. We focus predominantly on recent work. Our emphasis is on U.S. aggregate stock return predictability, but we also discuss evidence from other asset classes and countries.

Much of empirical corporate finance focuses on sources of the demand for various forms of capital, not the supply. Recently, this has changed. Supply effects of equity and credit markets can arise from a combination of three ingredients: investor tastes, limited intermediation, and corporate...

This is a terse account of group creation of modern finance theory; and a sampling of my prosaic autobiographical investing and consulting for nonprofit academies. Eschewing 1900 Bachelier and 1905 Einstein white noise randomness, my martingale version of market micro efficiency invoked no...

The recent financial crisis has triggered a major rethink of analytical approaches and policy toward financial stability. The crisis has encouraged a sharper focus on systemic risk, the inclusion of a financial sector in macroeconomic models, a shift from a microprudential to a macroprudential...

A large amount of activity in the financial sector occurs in secondary financial markets, where securities are traded among investors without capital flowing to firms. The stock market is the archetypal example, which in most developed economies captures a lot of attention and resources. Is the...

Short selling plays a unique role in financial markets. Short selling’s institutional structure is distinct from other types of trades, and short sellers have been shown to be more informed than other types of traders. This review discusses short sellers’ motivation, the institutional...

I review recent research efforts in the area of empirical cross-sectional asset pricing. I start by summarizing the evidence on cross-sectional return predictability and the failure of standard (consumption) capital asset pricing models (CAPMs) and their conditional versions to explain these...