This paper studies the importance of foreign direct investment (FDI)

PurposeThis paper aims to examine the concerns that high‐tech “new economy” companies employ aggressive revenue recognition practices to boost stock prices.Design/methodology/approachThe authors test empirically the hypothesis that revenue is more value relevant than other key performance measures traditional earnings and operating cash flows, especially in the case of high‐tech firms with losses.FindingsTest results from this study demonstrate the association between stock prices and reported revenues, both before and after year 2000 the stock market meltdown.Research limitations/implicationsThe study limits its scope on the high‐tech new economy sector. The findings may not be applicable to other industries.Practical implicationsAn important implication of the findings is that the association between stock prices and revenue is presumably the underlying reason for aggressive revenue recognition.Originality/valueThis paper provides empirical evidence demonstrating the association between stock prices and revenues, which is very valuable to policy makers and market participants.

This paper examines the assertion that the financial market pays fixed PE multiples and that the recognition of goodwill and subsequent amortization depresses earnings and stock prices, putting U.S. firms in a competitive disadvantage in the international merger and acquisition arena. Evidence from this study suggests that, contrary to common belief, price/earnings ratio expands by a sufficient amount in response to amortization, making amortization irrelevant to stock valuation.

This paper investigates the impact of institutional trading activity on stock pinning effect for both monthly and weekly equity options. After the introduction of weekly options over seven years, it shows the pinning effect with weekly options is stronger in comparison to monthly options. Furthermore, this paper shows that stock pinning remains pervasive on the expiration days and the effect is powerful with higher concentrated firm proprietary trading. We explore and find evidence that hedge rebalancing by firm traders might be a possible cause for stock pinning on option expiration days. The higher the fraction of firm trading, the more significant the clustering effect is.

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