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Overreaction to growth opportunities: an explanation of the asset growth anomaly

Cai, C.X.; Li, P.; Zhang, Q.

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Authors

C.X. Cai

P. Li

Q. Zhang



Abstract

The negative relation between asset growth and subsequent stock returns is known as the asset growth anomaly. We propose that overreaction to growth opportunities is the source of the asset growth anomaly. This suggests that growth firms as opposed to mature firms, and firms with longer series of asset growth should experience a stronger asset growth anomaly. Our evidence supports these predictions.

Citation

Cai, C., Li, P., & Zhang, Q. (2019). Overreaction to growth opportunities: an explanation of the asset growth anomaly. European Financial Management, 25(4), 747-776. https://doi.org/10.1111/eufm.12188

Journal Article Type Article
Acceptance Date Jun 4, 2018
Online Publication Date Jul 10, 2018
Publication Date Sep 30, 2019
Deposit Date Jun 29, 2018
Publicly Available Date Mar 29, 2024
Journal European Financial Management
Print ISSN 1354-7798
Electronic ISSN 1468-036X
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 25
Issue 4
Pages 747-776
DOI https://doi.org/10.1111/eufm.12188
Public URL https://durham-repository.worktribe.com/output/1322920

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Copyright Statement
This is the accepted version of the following article: Cai, C.X., Li, P. & Zhang, Q. (2019). Overreaction to growth opportunities: an explanation of the asset growth anomaly. European Financial Management 25(4): 747-776, which has been published in final form at https://doi.org/10.1111/eufm.12188. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.




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