Understanding the Asset Growth Anomaly

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See all articles by James O'Donovan

James O'Donovan

City University of Hong Kong (CityUHK)

Date Written: July 14, 2021

Abstract

Components of balance sheet asset growth driven by earnings management contributed to the asset growth anomaly in the past. These components of balance sheet asset growth are no longer related to returns and this has contributed to the disappearance of the asset growth anomaly. I provide evidence that the Sarbanes-Oxley Act reduced earnings management induced mispricing which I relate to the asset growth anomaly. More broadly, these findings point towards changes in the regulatory environment as a novel driver of equity market anomalies.

Keywords: Asset Growth Anomaly, Earnings Management, Accruals

Suggested Citation

O'Donovan, James, Understanding the Asset Growth Anomaly (July 14, 2021). Available at SSRN: https://ssrn.com/abstract=

James O'Donovan (Contact Author)

City University of Hong Kong (CityUHK) ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

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