A BLOG ABOUT FINANCIAL ECONOMICS
Latest posts
When Growth Destroys Value: Capital Intensity, ROIC, and the Cost of Capital
Growth is not automatically value creating. This post explains how capital intensity and the ROIC minus WACC spread determine whether expansion creates value or destroys it, with links to economic profit and EVA references.
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Book-Based vs Market-Based WACC: Explaining the Cross-Section of Returns
A balanced, research-oriented explanation of book-based versus market-based WACC, why historical costs of capital can be informative in cross-sectional return tests, what the key limitations are, and why theory is still catching up.
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The Value Creation Pricing Factor (CME): A Better “Value” Signal Than Book-to-Market?
A readable, research-backed walkthrough of the Value-Creation Pricing Factor (CME): what it is, how it’s built from ROIC–WACC economics, and why it improves on traditional value in modern factor models.
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