TY  - BOOK
AU  - Aghion,Philippe
AU  - Stein,Jeremy C.
ED  - National Bureau of Economic Research.
TI  - Growth vs. Margins: Destabilizing Consequences of Giving the Stock Market What it Wants 
T2  - NBER working paper series
PY  - 2004///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - December 2004; Hardcopy version available to institutional subscribers
N2  - We develop a multi-tasking model in which a firm can devote its efforts either to increasing sales growth, or to improving per-unit profit margins by, e.g., cutting costs. If the firm's manager is concerned with the current stock price, she will tend to favor the growth strategy at those times when the stock market is paying more attention to performance on the growth dimension. Conversely, it can be rational for the stock market to weight observed growth measures more heavily when it is known that the firm is following a growth strategy. This two-way feedback between firms' business strategies and the market's pricing rule can lead to purely intrinsic fluctuations in sales and output, creating excess volatility in these real variables even in the absence of any external source of shocks
UR  - https://www.nber.org/papers/w10999
UR  - http://dx.doi.org/10.3386/w10999
ER  -