Abstract

http://ssrn.com/abstract=904226
 
 

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The Relation Between Corporate Financing Activities, Analysts' Forecasts and Stock Returns


Mark Thomas Bradshaw


Boston College

Scott A. Richardson


London Business School; AQR Capital Management, LLC

Richard G. Sloan


University of California at Berkeley - Haas School of Business


Journal of Accounting and Economics, Forthcoming

Abstract:     
We develop a comprehensive and parsimonious measure of corporate financing activities and document a negative relation between this measure and both future stock returns and future profitability. The economic and statistical significance of the results using our comprehensive measure of external financing is stronger than in previous research focusing on individual categories of corporate financing activities. To discriminate between risk versus misvaluation as explanations for this relation, we analyze the association between our measure of external financing and sell-side analysts' forecasts. Consistent with the misvaluation explanation, we find that our measure of external financing is positively related to overoptimism in sell-side analysts' forecasts.

Number of Pages in PDF File: 59

Keywords: Financing, Sell-side analysts, Capital markets, Market efficiency

JEL Classification: G10, M14, G29, G32, M41

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Date posted: May 25, 2006  

Suggested Citation

Bradshaw, Mark Thomas and Richardson, Scott A. and Sloan, Richard G., The Relation Between Corporate Financing Activities, Analysts' Forecasts and Stock Returns. Journal of Accounting and Economics, Forthcoming. Available at SSRN: http://ssrn.com/abstract=904226

Contact Information

Mark Thomas Bradshaw
Boston College ( email )
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
Scott Anthony Richardson
London Business School ( email )
Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
AQR Capital Management, LLC ( email )
Greenwich, CT
United States
Richard G. Sloan (Contact Author)
University of California at Berkeley - Haas School of Business ( email )
545 Student Services Building
Berkeley, CA 94720
United States
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