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Firm Value, Risk, and Growth Opportunities

Hyun-Han Shin
Yonsei University - Business Administration

Rene M. Stulz
Ohio State University - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

June 2000

Dice Center Working Paper No. 2000-8

Abstract:
We show that Tobin's q, as proxied by the ratio of the firm's market value to its book value, increases with the firm's systematic equity risk and falls with the firm's unsystematic equity risk. Further, an increase in the firm's total equity risk is associated with a fall in q. The negative relation between the change in total risk and the change in q is robust through time for the whole sample, but it does not hold for the largest firms.

JEL Classifications: G30;G39

Working Paper Series

Date posted: September 27, 2000 ; Last revised: September 27, 2000

Suggested Citation

Shin, Hyun-Han and Stulz, Rene M., Firm Value, Risk, and Growth Opportunities (June 2000). Dice Center Working Paper No. 2000-8. Available at SSRN: http://ssrn.com/abstract=234344 or doi:10.2139/ssrn.234344

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Contact Information

Rene M. Stulz (Contact Author) Ohio State University - Department of Finance ( email ) 2100 Neil Avenue Columbus, OH 43210-1144 United States HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz
National Bureau of Economic Research (NBER) 1050 Massachusetts Avenue Cambridge, MA 02138 United States
European Corporate Governance Institute (ECGI) c/o ECARES ULB CP 114 B-1050 Brussels Belgium
Hyun-Han Shin Yonsei University - Business Administration ( email ) Wonju Korea