The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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The Cities Service Takeover: A Case Study
Published: 05/01/1983 | DOI: 10.1111/j.1540-6261.1983.tb02236.x
RICHARD S. RUBACK
The Valuation of Cash Flow Forecasts: An Empirical Analysis
Published: 09/01/1995 | DOI: 10.1111/j.1540-6261.1995.tb04050.x
STEVEN N. KAPLAN, RICHARD S. RUBACK
This article compares the market value of highly leveraged transactions (HLTs) to the discounted value of their corresponding cash flow forecasts. For our sample of 51 HLTs completed between 1983 and 1989, the valuations of discounted cash flow forecasts are within 10 percent, on average, of the market values of the completed transactions. Our valuations perform at least as well as valuation methods using comparable companies and transactions. We also invert our analysis by estimating the risk premia implied by transaction values and forecast cash flows, and relating those risk premia to firm and industry betas, firm size, and firm book‐to‐market ratios.
Inflation, Uncertainty, and Investment
Published: 07/01/1986 | DOI: 10.1111/j.1540-6261.1986.tb04528.x
CARLISS Y. BALDWIN, RICHARD S. RUBACK
This paper investigates the effect of inflation on a firm's investments in fixed assets. When future prices are certain, inflation affects the present value of depreciation tax shields, and the impact of inflation on the choice between different lived assets is nonmonotonic. Future asset price uncertainty creates a valuable switching option and benefits shorter‐lived assets.