Expectation Formation and the Financial Ratio Adjustment Processes

• Main Authors: Lee, Cheng F., WU, Chunchi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 1988
• Subjects: Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/818
• Institution: Singapore Management University

This paper analyzes the adjustment processes of financial ratios in the presence of costly adjustment and information uncertainty. The paper proposes a generalized partial adjustment-adaptive expectations model to characterize dynamic financial ratio adjustment processes. The proposed model incorpor...