Asset growth anomaly in Europe: Do profits and losses matter?

Georgios A. Papanastasopoulos

    Research output: Contribution to journalArticlepeer-review


    This paper investigates whether the well-documented asset growth effect on stock returns exists across both profit and loss firms in European capital markets. We find that the asset growth anomaly is more pronounced across loss firms and is significantly dampened by the inclusion of profit firms in the sample. The raw and abnormal returns earned from a hedge strategy on balance sheet growth for loss firms are almost two times higher than the respective returns for profit firms. Our evidence casts doubt on a risk-based explanation, thereby lending credence to the suggestion that the asset-growth effect is attributable to mispricing.

    Original languageEnglish
    Pages (from-to)106-109
    Number of pages4
    JournalEconomics Letters
    Publication statusPublished - 1 Jul 2017


    • Asset growth
    • Europe
    • Losses
    • Profits
    • Stock returns


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