TY  - JOUR
AU  - Lamont,Owen A.
AU  - Stein,Jeremy C.
TI  - Investor Sentiment and Corporate Finance: Micro and Macro
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11882
PY  - 2005
Y2  - December 2005
UR  - http://www.nber.org/papers/w11882
L1  - http://www.nber.org/papers/w11882.pdf
N1  - Author contact info:
Owen Lamont
Department of Economics
Harvard University
Cambridge MA 02138
E-Mail: owen.lamont@yale.edu

Jeremy C. Stein
Department of Economics
Harvard University
Littauer 209
Cambridge, MA  02138
Tel: 617/496-6455
Fax: 617/496-7352
E-Mail: jeremy_stein@harvard.edu
AB  - We document that net equity issuance is considerably more sensitive to aggregate stock returns and Q's than to firm-level stock returns and Q's. Very similar patterns also emerge when we look at merger activity. In light of earlier work (Campbell 1991, Vuolteenaho 2002) which finds that aggregate stock returns are less informative about future cashflows than are firm-level stock returns--and thus, potentially more strongly influenced by investor sentiment--these results suggest that both equity issuance and mergers are to a significant extent driven by market-timing considerations, as opposed to by purely fundamental factors.
ER  -