Value Versus Growth: Australian Evidence

25 Pages Posted: 4 May 2013

See all articles by Philip Gharghori

Philip Gharghori

Monash University

Sebastian Stryjkowski

Monash University

Madhu Veeraraghavan

T.A. PAI Management Institute, Finance Area

Multiple version iconThere are 2 versions of this paper

Date Written: June 2013


The value‐growth effect is one of the most pervasive patterns in stock prices. In this study, the ability of four proxies for value‐growth, book‐to‐market, sales‐to‐price, earnings‐to‐price and cash‐flow‐to‐price to explain equity returns is analysed. The findings show that in aggregate, book‐to‐market best explains cross‐sectional variation in Australian equity returns, which in isolation suggests that it is the superior proxy for value‐growth. The analysis is taken further and the value‐growth effect is examined separately in positive and negative earnings firms. After segregating firms, it is found that in the negative earnings sample, book‐to‐market is the best value‐growth proxy and in the positive earnings sample, cash‐flow‐to‐price has the highest level of significance and is thus the superior value‐growth proxy. The economic significance of this result is telling, as the firms that report positive earnings are much larger than those that report negative earnings.

Keywords: Book‐to‐market effect, Positive and negative earnings, Value‐growth effect

JEL Classification: G11, G12, G15

Suggested Citation

Gharghori, Philip and Stryjkowski, Sebastian and Veeraraghavan, Madhu, Value Versus Growth: Australian Evidence (June 2013). Accounting & Finance, Vol. 53, Issue 2, pp. 393-417, 2013, Available at SSRN: or

Philip Gharghori (Contact Author)

Monash University ( email )

Wellington Road
Melbourne, 3800
+61399059247 (Phone)


Sebastian Stryjkowski

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800

Madhu Veeraraghavan

T.A. PAI Management Institute, Finance Area ( email )

Manipal, Karnataka 576104
+91-820-2701030 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics