We model the time‐series relation between price and intrinsic value as a cointegrated system, so that price and value are long‐term convergent. In this framework, we compare the performance of alternative estimates of intrinsic value for the Dow 30 stocks. During 1963–1996, traditional market multiples (e.g., B/P, E/P, and D/P ratios) have little predictive power. However, a V/P ratio, where V is based on a residual income valuation model, has statistically reliable predictive power. Further analysis shows time‐varying interest rates and analyst forecasts are important to the success of V. Alternative forecast horizons and risk premia are less important.

This study assesses the stock return performance of 131 firms emerging from Chapter 11. Using differing estimates of expected returns, we consistently find evidence of large, positive excess returns in 200 days of returns following emergence. We also examine the reaction of our sample firms' equity returns to their earnings announcements after emergence from Chapter 11. The positive and significant reactions suggest that our results are driven by the market's expectational errors, not mismeasurement of risk. The results provide an interesting contrast, but not a contradiction, to previous work that has documented poor operating performance for firms emerging from Chapter 11.

Analyses of common property extraction under free access follow two distinct paths, traditional and game‐theoretic, giving rise to two standard methodologies. One methodology avoids game‐theoretic analysis by assuming that aggregate extraction in each period induces fel rent dissipation. The second methodology solves for the Marko‐perfect equilibrium of an n‐player extraction game investigating aggregate behavior over time as n → ∞. We show by example that these coexisting standard methodologies can yield conflicting predictions. We then provide conditions, relatively easy to satisfy, sufficient for the two approaches to yield the same predictions.

Anomalous Behavior in a Traveler's Dilemma? by C. Monica Capra, Jacob K. Goeree, Rosario Gomez and Charles A. Holt. Published in volume 89, issue 3, pages 678-690 of American Economic Review, June 1999