Stock market's assessment of monetary policy transmission: The cash flow effect

buir.contributor.orcidGürkaynak, Refet|0000-0003-4266-7463en_US
buir.contributor.orcidLee, Sang Seok|0000-0002-3798-546Xen_US
dc.citation.epage2421en_US
dc.citation.issueNumber4en_US
dc.citation.spage2375en_US
dc.citation.volumeNumber77en_US
dc.contributor.authorGürkaynak, Refet
dc.contributor.authorKarasoy-Can, Hatice Gökçe
dc.contributor.authorLee, Sang Seok
dc.contributor.bilkentauthorGürkaynak, Refet
dc.contributor.bilkentauthorLee, Sang Seok
dc.date.accessioned2023-02-28T11:10:36Z
dc.date.available2023-02-28T11:10:36Z
dc.date.issued2022-05-30
dc.departmentDepartment of Economicsen_US
dc.description.abstractWe show that firm liability structure and associated cash flows matter for firm behavior and that financial market participants price stocks accordingly. Stock price reactions to monetary policy announcements depend on the type and maturity of debt issued by the firms and the forward guidance provided by the Fed, both at and away from the zero lower bound. Further, the marginal stock market participant knows the current liability structures of firms and does not rely on rules of thumb. The cash flow exposure at the time of monetary policy actions predicts future investment, assets, and net worth, clearly violating the Modigliani-Miller theorem.en_US
dc.identifier.doi10.1111/jofi.13163en_US
dc.identifier.eissn1540-6261
dc.identifier.issn0022-1082
dc.identifier.urihttp://hdl.handle.net/11693/111916
dc.language.isoEnglishen_US
dc.publisherJohn Wiley & Sons, Ltden_US
dc.relation.isversionofhttps://doi.org/10.1111/jofi.13163en_US
dc.source.titleThe Journal of Financeen_US
dc.titleStock market's assessment of monetary policy transmission: The cash flow effecten_US
dc.typeArticleen_US
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