Accrual anomaly and corporate financing activities

Georgios Papanastasopoulos

    Research output: Contribution to journalArticlepeer-review


    We examine the mispricing versus rational explanation of the accrual anomaly for U.K. listed firms by focusing on the interaction between accruals and equity financing activities. Portfolio-level analyses and firm-level regressions indicate that the negative relation of accruals with future profitability and stock returns occurs only when firms with low accruals that repurchase equity and firms with high accruals that issue equity are considered. In contrary, this negative relation is dampened by the inclusion of firms with low (high) accruals that issue (repurchase) equity. Our evidence suggests that investors misprice accruals in U.K. and casts doubt on the rational explanation.

    Original languageEnglish
    Pages (from-to)125-129
    Number of pages5
    JournalFinance Research Letters
    Publication statusPublished - 1 Feb 2017


    • Accruals
    • Mispricing
    • Profitability
    • Returns
    • Risk


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