Asset growth and the cross-section of stock returns: evidence from Greek listed firms

Abstract

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.

Investor’s Stock Selection Decision: Influence of Profitability, Company Size, and Raroc

“…This proves the rejection of the hypothesis in this study and simultaneously answers the problem of the influence of company size on stock selection decision. This finding is in accordance with the results of research conducted by Constantinou, Karali and Papanastasopoulos (2017), Dewi and Wirajaya (2013) where firm size has no significant effect and Rahmawati, Topowijono and Sulasmiyati (2015) has conflicting results, where firm size has a negative effect.…”

Investor Response to Financial Performance and Business Prospect

“…EMH focuses on information efficiency, where companies will immediately adjust when new information is generated [73]. [74] also say that this theory underlies the statement that stock prices reflect all relevant and available information, which changes when new information is entered. Therefore, in an efficient market, the rate of return that investors get must be commensurate with the risk they are willing to take, and investors cannot get a favorable rate of return on their investment through corporate governance [75].…”

Apakah sinyal kinerja keuangan masih terkonfirmasi? : Studi empiris lembaga keuangan di PT. BEI

“…Pertumbuhan perusahaan dapat diukur atau diartikan sebagai peristiwa peningkatan aset perusahaan. Penelitian yang mengukur pertumbuhan perusahaan melalui aset perusahaan juga telah banyak dilakukan (Constantinou, Karali, & Papanastasopoulos, 2017). Meskipun demikian, pertumbuhan perusahaan yang signifikan dan kontinyu belum tentu menjadi sinyal bagus bagi investor bahwa perusahaan telah meningkatkan nilainya karena investor menganalisis tentang penyebab pertumbuhan.…”

“…Dalam perspektif teori sinyal, dikatakan bahwa pertumbuhan perusahaan dianggap sebagai berita baik dan diasumsikan akan memberikan sinyal positif. Sinyal atau informasi pertumbuhan perusahaan juga dikonfirmasi dengan baik oleh investor (Constantinou et al, 2017). Berdasarkan penjelasan teori dan riset terdahulu, maka dapat dihipotesiskan sebagai berikut: H3: Pertumbuhan perusahaan berpengaruh positip terhadap nilai perusahaan pada perusahaan sektor keuangan.…”