Please use this identifier to cite or link to this item: https://doi.org/10.1146/annurev-financial-110112-120936
Title: R2 and the economy
Authors: Morck, R.
Yeung, B. 
Yu, W.
Keywords: creative destruction
economic development
market efficiency
stock returns comovement
synchronicity
Issue Date: Nov-2013
Citation: Morck, R., Yeung, B., Yu, W. (2013-11). R2 and the economy. Annual Review of Financial Economics 5 : 143-166. ScholarBank@NUS Repository. https://doi.org/10.1146/annurev-financial-110112-120936
Abstract: The characterization of firm-specific return volatility as the intensity with which firm-specific events occur reconciles many seemingly discordant results. A functionally efficient stock market allocates capital to its highest value uses, which often amounts to financing Schumpeterian creative destruction, wherein creative winner firms outpace destroyed losers, who could be the previous year's winners. This rise in firm-specific fundamentals volatility elevates firm-specific return volatility in a sufficiently informationally efficient stock market. These linkages are interconnected feedback loops rather than unidirectional chains of causality. Copyright © 2013 by Annual Reviews. All rights reserved.
Source Title: Annual Review of Financial Economics
URI: http://scholarbank.nus.edu.sg/handle/10635/115898
ISSN: 19411367
DOI: 10.1146/annurev-financial-110112-120936
Appears in Collections:Staff Publications

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