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

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

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: Jul 10, 2020
• 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