Summarizes previous research on factors affecting the market value of a firm’s equity and puts forward a mathematical model based on the idea that its investment opportunity set is positively related to reputation, multinationality, size and profitability; and negatively related to leverage and systematic risk. Tests this on 1987‐1993 data on US multinational companies, explains the methods used and shows that the relationship is as hypothesized, although the results depend on the choice of surrogate measures for the variables. Calls for further research.
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AlNajjar et al. (2001) studied this question.
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