Abstract

http://ssrn.com/abstract=1159846
 
 

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The Profitability and Equity Financing of Style Groups: 1906-2006


Kenneth R. French


Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Eugene F. Fama


University of Chicago - Finance

July 14, 2008


Abstract:     
We extend the evidence of Fama and French (1995) on the post-1962 profitability and equity financing of firms in different style groups (small versus big, value versus growth) to 1926-2006. The emphasis is on whether equity-financed investment varies with cashflows and price-to-book ratios in ways that support or violate the pecking order model of Myers (1984) or the Q theory of investment. The long-term perspective from the results for 1926-2006 provides insights into inferences about the pecking order and Q theory drawn from previous work that focuses on shorter, more recent periods.

Number of Pages in PDF File: 27

Keywords: Equity financing, pecking order, Q-theory

JEL Classification: G30, G32, G35

working papers series


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Date posted: July 15, 2008  

Suggested Citation

French, Kenneth R. and Fama, Eugene F., The Profitability and Equity Financing of Style Groups: 1906-2006 (July 14, 2008). Available at SSRN: http://ssrn.com/abstract=1159846 or http://dx.doi.org/10.2139/ssrn.1159846

Contact Information

Kenneth R. French
Dartmouth College - Tuck School of Business ( email )
Hanover, NH 03755
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Eugene F. Fama (Contact Author)
University of Chicago - Finance ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7282 (Phone)
773-702-9937 (Fax)
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