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Asset Growth and Stock Returns: Evidence from Asian Financial Markets

43 Pages Posted: 30 Sep 2010 Last revised: 12 Oct 2010

Tong Yao

University of Iowa - Henry B. Tippie College of Business

Tong Yu

University of Cincinnati - Department of Finance - Real Estate

Ting Zhang

University of Dayton - School of Business Administration

Shaw Chen

University of Rhode Island - College of Business Administration

Date Written: September 1, 2010

Abstract

This study examines the effect of corporate asset growth on stock returns using data on nine equity markets in Asia. For the period from 1981 to 2007, we find a pervasive negative relation between asset growth and subsequent stock returns. Such relation is weaker in markets where firms’ asset growth rates are more homogeneous and persistent and in markets where firms rely more on bank financing for growth. On the other hand, corporate governance, investor protection, and legal origin do not influence the magnitude of the asset growth effect in Asian markets.

Suggested Citation

Yao, Tong and Yu, Tong and Zhang, Ting and Chen, Shaw, Asset Growth and Stock Returns: Evidence from Asian Financial Markets (September 1, 2010). Available at SSRN: https://ssrn.com/abstract=1683784 or http://dx.doi.org/10.2139/ssrn.1683784

Tong Yao

University of Iowa - Henry B. Tippie College of Business ( email )

Acquisitions
5020 Main Library
Iowa City, IA 52242-1000
United States

Tong Yu

University of Cincinnati - Department of Finance - Real Estate ( email )

College of Business Administration
Cincinnati, OH 45221
United States
4019548606 (Phone)
4019548606 (Fax)

Ting Zhang (Contact Author)

University of Dayton - School of Business Administration ( email )

300 College Park
Dayton, OH 45469
United States

Shaw Chen

University of Rhode Island - College of Business Administration ( email )

Quinn Hall
55 Lower College Rd.
Kingston, RI 02881
United States

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