Risk, Duration, and Capital Budgeting: New Evidence on Some Old Questions

Bradford Cornell

The Journal of Business, 1999, vol. 72, issue 2, 183-200

Abstract: In a provocative article John Y. Campbell and Jianping Mei (1993) suggest that systematic risk arises not because of correlation between a company's cash flow and the market return but primarily because of common variation in expected returns. If true, the Campbell-Mei hypothesis has important implications for capital budgeting, particularly at high-technology companies that have long duration, idiosyncratic investment projects. This article presents some new evidence related to the Campbell-Mei hypothesis and then evaluates the impact of the hypothesis with a case study of Amgen Corporation. Copyright 1999 by University of Chicago Press.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jnlbus:v:72:y:1999:i:2:p:183-200

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