【正文】 quations (8) and (12):ROCE = ROOA ＋[TLEV(ROOA － total borrowing rate)] (13)In summary, ?nancial statement analysis of operating and ?nancing activities yields three leveraging equations, (8), (12), and (13). These equations are based on ?xed accounting relations and are therefore deterministic: They must hold for a given ?rm at a given point in time. The only requirement in identifying the sources of pro?tability appropriately is a clean separation between operating and ?nancing ponents in the ?nancial statements.2 Leverage, Equity Value and PricetoBook RatiosThe leverage effects above are described as effects on shareholder pro?tability. Our interest is not only in the effects on shareholder pro?tability, ROCE, but also in the effects on shareholder value, which is tied to ROCE in a straightforward way by the residual ine valuation model. As a restatement of the dividend discount model, the residual ine model expresses the value of equity at date 0 (P0) as:B is the book value of mon shareholders’ equity, X is prehensive ine to mon shareholders, and r is the required return for equity investment. The price premium over book value is determined by forecasting residual ine, Xt – rBt1. Residual ine is determined in part by ine relative to book value, that is, by the forecasted ROCE. Accordingly, leverage effects on forecasted ROCE (net of effects on the required equity return) affect equity value relative to book value: The price paid for the book value depends on the expected pro?tability of the book value, and leverage affects pro?tability.So our empirical analysis investigates the effect of leverage on both pro?tability and pricetobook ratios. Or, stated differently, ?nancing and operating liabilities are distinguishable ponents of book value, so the question is whether the pricing of book values depends on the position of book values. If this is the case, the different ponents of book value must imply different pro?tability. Indeed, the two analyses (of pro?tability and pricetobook ratios) are plementary.Financing liabilities are contractual obligations for repayment of funds loaned. Operating liabilities include contractual obligations (such as accounts payable), but also include accrual liabilities (such as deferred revenues and accrued expenses). Accrual liabilities may be based on contractual terms, but typically involve estimates. We consider the real effects of contracting and the effects of accounting estimates in turn. Appendix A provides some examples of contractual and estimated liabilities and their effect on pro?tability and value. Effects of Contractual liabilitiesThe ex post effects of ?nancing and operating liabilities on pro?tability are clear from leveraging equations (8), (12) and (13). These expressions always hold ex post, so there is no issue regarding ex post effects. But valuation concerns ex ante effects. The extensive research on the effects of ?nancial leverage takes, as its point of departure, the Modigliani and Miller (Mamp。M) (1958) ?nancing irrelevance proposition: With perfect capital markets and no taxes or information asymmetry, debt ?nancing has no effect on value. In terms of the residual ine valuation model, an increase in ?nancial leverage due to a substitution of debt for equity may increase expected ROCE according to expression (8), but that increase is offset in the valuation (14) by the reduction in the book value of equity that earns the excess pro?tability and the increase in the required equity return, leaving total value (., the value of equity and debt) unaffected. The required equity return increases because of increased ?nancing risk: Leverage may be expected to be favorable but, the higher the leverage, the greater the loss to shareholders should the leverage turn unfavorable ex post, with RNOA less than the borrowing rate.In the face of the Mamp。M proposition, research on the value effects of ?nancial leverage has proceeded to relax the conditions for the proposition to hold. Modigliani and Miller (1963) hypothesized that the tax bene?ts of debt increase aftertax returns to equity and so increase equity value. Recent empirical evidence provides support for the hypothesis (., Kemsley and Nissim, 2002), although the issue remains controversial. In any case, since the implicit cost of operating liabilities, like interest on ?nancing debt, is tax deductible, the position of leverage should have no tax implications.Debt has been depicted in many studies as affecting value by reducing transaction and contracting costs. While debt increases expected bankruptcy costs and introduces agency costs between shareholders and debtholders, it reduces the costs that shareholders must bear in monitoring management, and may have lower issuing costs relative to equity. One might expect these considerations to apply to operating debt as well as ?nancing debt, with the effects differing only by degree. Indeed papers have explained the use of trade debt rather than ?nancing debt by transaction costs (Ferris, 1981), differential access of suppliers and buyers to ?nancing (Schwartz,1974), and informational advantages and parative costs of monitoring (Smith, 1987。 Mian and Smith, 1992。 Biais and Gollier, 1997). Petersen and Rajan (1997) provide some tests of these explanations.In addition to tax, transaction costs and agency costs explanations for leverage, research has also conjectured an informational role. Ross (1977) and Leland and Pyle (1977) characterized ?nancing choice as a signal of pro?tability and value, and subsequent papers (for example, Myers and Majluf, 1984) have carried the idea further. Other studies have ascribed an informational role also for operating liabilities. Biais and Gollier (1997) and Petersen and Rajan (1997), for example, see suppliers as having more information about ?rms than banks and the bond market, so more operating debt might indicate higher value. Alternatively, high trade payables mig