Capital Investments and Stock Returns

Journal of Financial and Quantitative Analysis - Tập 39 Số 4 - Trang 677-700 - 2004
Sheridan Titman, K.C. John Wei, Feixue Xie1
1Economics and Finance

Tóm tắt

AbstractFirms that substantially increase capital investments subsequently achieve negative benchmark-adjusted returns. The negative abnormal capital investment/return relation is shown to be stronger for firms that have greater investment discretion, i.e., firms with higher cash flows and lower debt ratios, and is shown to be significant only in time periods when hostile takeovers were less prevalent. These observations are consistent with the hypothesis that investors tend to underreact to the empire building implications of increased investment expenditures. Although firms that increase capital investments tend to have high past returns and often issue equity, the negative abnormal capital investment/return relation is independent of the previously documented long-term return reversal and secondary equity issue anomalies.

Từ khóa


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Thông tin
Thông tin xuất bản

Journal of Financial and Quantitative Analysis

Tập 39 Số 4

677-700

Thông tin tác giả