Purpose
The purpose of this paper is to examine whether firm-level asset investment effects in returns found for US firms occur within the Greek stock market.
Design/methodology/approach
The paper utilizes portfolio-level tests and cross-sectional regressions.
Findings
The authors find that growth in total assets is strongly negatively related to future stock returns of Greek firms. In fact, the relation remains statistically significant, even when the authors control for other strong predictors of future returns (i.e. market capitalization and book-to-market ratio). Furthermore, the authors find that a hedge trading strategy on asset growth rate consisting of a long (short) position in firms with low (high) balance sheet growth generates positive returns, confirming that investment growth has significant predictive power for future returns of Greek listed firms.
Originality/value
The paper adds to the literature on the generalization of asset pricing regularities attributable to accounting figures in an emerging market.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.