TY  - BOOK
AU  - Stein,Jeremy C.
ED  - National Bureau of Economic Research.
TI  - Rational Capital Budgeting in an Irrational World
T2  - NBER working paper series
PY  - 1996///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - March 1996; Hardcopy version available to institutional subscribers
N2  - This paper addresses the following basic capital budgeting question: Suppose that cross-sectional differences in stock returns can be predicted based on variables other than beta (e.g., book-to- market), and that this predictability reflects market irrationality rather than compensation for fundamental risk.  In this setting, how should companies determine hurdle rates?  I show how factors such as managerial time horizons and financial constraints affect the optimal hurdle rate.  Under some circumstances, beta can be useful as a capital budgeting tool, even if it is of no use in predicting stock returns
UR  - https://www.nber.org/papers/w5496
UR  - http://dx.doi.org/10.3386/w5496
ER  -