An equity strategist from a leading Wall Street firm predicted in 2010 that, after considerable deleveraging during the financial crisis, firms would once again lever up with more borrowing. "They must defend their return on equity," he claimed. As a result, "investors should look for a rise in dividends and share buy-backs and an expansion of P/E multiples, leading to equity market out-performance.   Is he correct?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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An equity strategist from a leading Wall Street firm predicted in 2010 that, after considerable deleveraging during the financial crisis, firms would once again lever up with more borrowing. "They must defend their return on equity," he claimed. As a result, "investors should look for a rise in dividends and share buy-backs and an expansion of P/E multiples, leading to equity market out-performance.  

Is he correct? 

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