M – Business Administration and Business Economics; Marketing; Accounting; Personnel Economics

O – Economic Development, Innovation, Technological Change, and Growth

Q – Agricultural and Natural Resource Economics; Environmental and Ecological Economics

R – Urban, Rural, Regional, Real Estate, and Transportation Economics

M – Business Administration and Business Economics; Marketing; Accounting; Personnel Economics

O – Economic Development, Innovation, Technological Change, and Growth

Q – Agricultural and Natural Resource Economics; Environmental and Ecological Economics

R – Urban, Rural, Regional, Real Estate, and Transportation Economics

, Volume 27, Issue 11, November 2014, Pages 32413279,

Salman Arif, Charles M. C. Lee, Aggregate Investment and Investor Sentiment,The Review of Financial Studies, Volume 27, Issue 11, November 2014, Pages 32413279,

Using bottom-up information from corporate financial statements, we examine the relation between aggregate investment, future equity returns, and investor sentiment. Consistent with the business cycle literature, corporate investments peak during periods of positive sentiment, yet these periods are followed by lower equity returns. This pattern exists in most developed countries and survives controls for discount rates, equity flows, valuation multiples, operating accruals, and other investor sentiment measures. Higher aggregate investments also precede greater earnings disappointments, lower short-window earnings announcement returns, and lower macroeconomic growth. We conclude aggregate corporate investment is an alternative, and possibly sharper, measure of market-wide investor sentiment.

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