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.
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.
Capital Productivity and Value Creation Trends
Value creation in U.S. equity markets has shifted since 2008. This article analyzes capital productivity, cost of capital, and why firms with low value creation now outperform.
The Value-Creation Pricing Factor: Improving the Fama-French Five-Factor Model
Explore the Value-Creation Pricing Factor based on EVA (ROIC-WACC) and its ability to improve the Fama-French five-factor model. Evidence from a Master’s thesis on asset pricing and economic value creation.