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

Peng Li; Charlie Cai; Qi Zhang

doi:10.1111/eufm.12188

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

Peng Li
, Charlie Cai
, Qi Zhang

University of Liverpool
Shanghai Jiao Tong University

Research output: Contribution to journal › Article › peer-review

4 Citations (SciVal)

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.

Original language	English
Pages (from-to)	747-776
Journal	European Financial Management
Volume	25
Issue number	4
DOIs	https://doi.org/10.1111/eufm.12188
Publication status	Published - Sept 2019

Access to Document

10.1111/eufm.12188

Cite this

@article{872c0ff2897d40b4a6eed657b87adfc7,

title = "Overreaction to growth opportunities: An explanation of the asset growth anomaly",

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.",

author = "Peng Li and Charlie Cai and Qi Zhang",

year = "2019",

month = sep,

doi = "10.1111/eufm.12188",

language = "English",

volume = "25",

pages = "747--776",

journal = "European Financial Management",

issn = "1354-7798",

publisher = "Wiley-Blackwell Publishing Ltd",

number = "4",

}

TY - JOUR

T1 - Overreaction to growth opportunities: An explanation of the asset growth anomaly

AU - Li, Peng

AU - Cai, Charlie

AU - Zhang, Qi

PY - 2019/9

Y1 - 2019/9

N2 - 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.

AB - 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.

U2 - 10.1111/eufm.12188

DO - 10.1111/eufm.12188

M3 - Article

SN - 1354-7798

VL - 25

SP - 747

EP - 776

JO - European Financial Management

JF - European Financial Management

IS - 4

ER -

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

Abstract

Access to Document

Fingerprint

Cite this