Abstract
We study the effect of growth in firms' balance sheets on stock returns by decomposing asset growth into two components, one that captures real investment growth and one that captures accounting distortions and/or reduced efficiency. We show that these components play significant and complementary roles in driving the asset growth anomaly in European equity markets. The effect of the real investment growth (accounting distortions and/or reduced efficiency) component on stock returns, is found stronger in countries with higher (lower) degree of market efficiency, weaker (stronger) barriers to arbitrage, stronger (weaker) corporate governance and less (more) managerial discretion over earnings.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
