When Does the Market Matter? Stock Prices and the Investment of Equity-Dependent Firms

By Malcolm P. Baker, Jeremy C. Stein, Jeffrey Wurgler. 2003

1,482 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/0fc83a8fb27cdf61c4738cac92c38d3e688c576b

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Citations in the corpus

CEO Overconfidence and Corporate Investment (2005, neutral): “First, we construct the Kaplan–Zingales index of financial constraint—used by Lamont, Polk, and SaáRequejo (2001), Malmendier and Tate (2003), and Baker, Stein, and Wurgler (2003)—for our sample of firms.”
Who Makes Acquisitions? CEO Overconfidence and the Market's Reaction (2008, positive): “Following recent research (Baker, Stein, and Wurgler, 2003; Lamont, Polk, and Saá-Requejo, 2001; Malmendier and Tate, 2005), we use the twice-lagged value of the index to split sample firms into quintiles and estimate random-effects logit regressions of Eq.”
Corporate Social Responsibility and Access to Finance (2012, methodology): “…of interest is the “KZ index”, first advocated by Kaplan and Zingales (1997) and subsequently used extensively in the corporate finance literature (e.g. Lamont et al., 2001; Baker et al., 2003; Almeida et al., 2004; Bakke and Whited, 2010; Hong et al., 2011) as a measure of capital constraints.”
Earnings Management and Executive Compensation: A Case of Overdose of Option and Underdose of Salary? (2002, methodology): “Consistent with Baker et al. (2002), we find that KZ index exhibits substantial amount of cross-sectional variation so we winsorize for the top and bottom one percent of estimates to mitigate the effects of potentially influential extreme values.”
The influence of corporate social responsibility on investment efficiency and innovation (2019, neutral): “Because managers possess private information about the values of their firms that investors lack, managers may time the market, issue overpriced securities, and overinvest the proceeds in, for example, mergers and acquisitions (Baker et al. 2003) or pet projects.”
The Real Effects of Political Uncertainty: Elections and Investment Sensitivity to Stock Prices (2010, methodology): “To test this argument, we first sort company-year observations according to the measure of financing constraints used in Baker et al. (2003) (this measure is based on Kaplan and Zingales’ (1997) five-variable KZ index). 37 We then re-run every regression for different quintiles of firms. The results”
Capital Market-Driven Corporate Finance (2009, background): “Baker et al. (2003a) find return predictability in bond maturity choice, and patterns are also apparent in corporate hedging choices in Brown et al. (2006) and Faulkender (2005).”
Peer performance and stock market entry (2012, neutral): “…Shleifer and Thaler 1991), retail investor trading (Kumar and Lee 2006; Barber et al. 2009), IPO pricing patterns (Cornelli, Goldreich, and Ljungqvist 2006; Derrien 2005), investment (Baker, Stein, and Wurgler 2003, Polk and Sapienza 2009), and stock return predictability (Baker and Wurgler 2006).”
The Business Cycle, Investor Sentiment, and Costly External Finance (2012, positive): “Like Baker, Stein, and Wurgler (2003), we exclude firms that do not have positive book values of equity, and firms that have book value of assets that are less than $10 million.”
The Determinants of Corporate Debt Maturity Structure (2012, methodology): “Additionally, according to Baker et al. (2003) debt maturity is also related to debt market conditions, such as interest and inflation rates as well as a term spread.”
Feedback Effects and Asset Prices (2008, background): “For example, the feedback effect may arise because an increase in stock price has eased the financing constraint for firms and thus enabled these firms to increase investments (Sunder (2005) and Baker, Stein, and Wurgler (2003)).”
Market Timing, Investment, and Risk Management (2012, positive): “Stein (1996) develops a static model of market timing and Baker, Stein, and Wurgler (2003) empirically test this model.3 To some extent, our model can be viewed as a dynamic formulation of Stein (1996), in which a rational manager behaves in the interest of existing shareholders in the face of a…”