Leading Indicators for Investors

Hemang Desai, accounting professor at SMU's Cox School of Business, talks about the recent spate of market activity and what it could mean for investors.


With the economy recovering and markets on a tear, American corporations are snapping into action—spinning off subsidiaries, buying back stock and making other moves that are widely viewed as telling signals of how insiders value their own firms.

A recent flurry of high-profile activity raises a question for investors about how to interpret those signals: Buy or beware?

Maybe the markets have learned" that investing in these companies can pay off, says Hemang Desai, a professor of accounting at Southern Methodist University who has written about both spinoffs and stock splits. "Maybe the hedge funds have learned."...