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Equivalent Risk Classes: A Multidimensional Examination

Published online by Cambridge University Press:  06 April 2009

John D. Martin,
David F. Scott Jr and
Robert F. Vandell
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Extract

It Is commonplace within the confines of finance literature to explain variations in the firm's residual income stream via the dichotomy of business risk and financial risk. On an ex-post basis the business risk of the enterprise is a direct result of the firm's investment decision and is, thereby, embodied in its asset structure. It follows that the company's cost structure, product demand characteristics, intra-industry competitive position, and managerial talent all affect its business risk posture.

Information

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 14 , Issue 1 , March 1979, pp. 101 - 118
Copyright
Copyright © School of Business Administration, University of Washington 1979

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