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

Posted: 12 Feb 1999

See all articles by Bradford Cornell

Bradford Cornell

Anderson Graduate School of Management, UCLA

Abstract

In a provocative article, Campbell and Mei 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.

JEL Classification: G31, G32

Suggested Citation

Cornell, Bradford, Risk, Duration, and Capital Budgeting: New Evidence on Some Old Questions. Available at SSRN: https://ssrn.com/abstract=146745

Bradford Cornell (Contact Author)

Anderson Graduate School of Management, UCLA ( email )

Pasadena, CA 91125
United States
626 833-9978 (Phone)

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