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AbstractPrevious research shows that stock returns are related to firm market value and earnings yield. This study decomposes the measurements of market value and earnings yield into separate components (share price and shares outstanding for market value, earnings per share and share price for earnings yield) and examines the relationship between stock return and these components. Share price represents approximately three‐fourths of the relationship between stock returns and either market value or earnings yield. Potential causes for this phenomenon are advanced.

Recent studies have examined possible causes of the robust empirical failure of the transitivity axiom of expected utility theory by pitting regret aversion against alternative explanations such as event‐splitting effects. These tests show that cycles replicate when the latter are controlled, but are sensitive to changes in problem representation. The control for event‐splitting effects, however, does not rule out their contribution to cyclical choices in some circumstances. An experiment is reported which investigates this possibility. Cyclical choices are observed that cannot be due to event‐splitting effects, but appear attributable to within‐event and between‐act evaluations of decision problems plus framing effects.