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| Author: | Cohen, D.A. Lys, T.Z. |
| Title: | Weighing the evidence on the relation between external corporate financing activities, accruals and stock returns |
| Journal: | Journal of Accounting & Economics
2006 : OCT, VOL. 42:1-2, p. 87-105 |
| Index terms: | capital markets efficiency financing models |
| Language: | eng |
| Abstract: | Bradshaw, Richardson, and Sloan (BRS) find a negative relation btw. their comprehensive measure of corporate financing activities and future stock returns and future profitability. This study questions whether it is possible to distinguish btw. the 'external financing anomaly' documented by BRS and the 'accrual anomaly' first documented by Sloan (1996). Do stock prices fully reflect information in accruals and cash flows about future earnings? It is shown that once controlling for total accruals, the relation btw. external financing activities and future stock returns is attenuated and not statistically significant. These findings are consistent with Richardson and Sloan (2003). |
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