A New Multiple Equation Specification Testing Strategy. Using a new specification testing strategy based on combining Q and Euler equations, we find that managers base investment decisions on fundamentals despite stock market bubbles. Three types of collateral evidence reinforce this interpretation. We would like to acknowledge useful comments from M. Galleotti, J. Huizinga, F. Schiantarelli, and J. Wilson, seminar participants at Carleton University, and the computational support provided by J.R. Dempsey.
Any errors are our own.
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