Do investors overvalue firms with bloated balance sheets?

• 成果类型: Article; Proceedings Paper
• 署名作者: Hirshleifer, D; Hou, KW; Teoh, SH; Zhang, YL
• 署名单位: University System of Ohio; Ohio State University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2004.10.002
• 发表日期: 2004
• 关键词: EXTENDED FUNCTIONAL FIXATION; earnings management; SECURITY RETURNS; Cash flows; STOCK; performance; INFORMATION; prediction; winners; issues

摘要

When cumulative net operating income (accounting value-added) outstrips cumulative free cash flow (cash value-added), subsequent earnings growth is weak. If investors with limited attention focus on accounting profitability, and neglect information about cash profitability, then net operating assets, the cumulative difference between operating income and free cash flow, measures the extent to which reporting outcomes provoke over-optimism. During the 1964-2002 sample period, net operating assets scaled by total assets is a strong negative predictor of long-run stock returns. Predictability is robust with respect to an extensive set of controls and testing methods. (C) 2005 Elsevier B.V. All rights reserved.