TITLE:
Do Fictitiously High Asset Growth Rates Drive the Asset Growth Anomaly?
AUTHORS:
Panagiotis Artikis, Georgios Papanast Asopoulos, Evangelos Sfakianakis, Lydia Diamantopoulou
KEYWORDS:
Asset Growth, Stock Returns, Earnings Manipulation, Mispricing
JOURNAL NAME:
Theoretical Economics Letters,
Vol.13 No.3,
June
30,
2023
ABSTRACT: Purpose: This paper investigates
whether the well-documented asset growth anomaly can be related to information
uncertainty due to earnings management. Design/Methodology/Approach: We
perform both portfolio-based and regression-based analyses. We employ the 5 Variable Version
of the Beneish model (Beneish, 1999) as an earnings management proxy and Piotroski’s (2000) FSCORE as
a proxy for firms’ fundamental strength. Findings: Overall, our evidence suggests that the asset
growth anomaly can be driven by high asset growth firms, manipulating their
accounting figures. Originality: Given the
implicit inferences that attribute the phenomenon to earnings management mainly by employing country-level proxies, we provide new
insights by employing variables measured at the firm level.