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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/27556

Title: Weighing the Evidence on the Relation between External Corporate Financing Activities, Accruals and Stock Returns
Authors: Cohen, Daniel A.
Lys, Thomas Z.
Keywords: External financing
Analysts’ forecasts
Accruals
Capital Markets
Market Efficiency
Issue Date: 28-Apr-2006
Series/Report no.: Daniel A. Cohen-11
Abstract: Bradshaw, Richardson, and Sloan (BRS) find a negative relation between their comprehensive measure of corporate financing activities and future stock returns and future profitability. Noticing that accounting accruals are increases in net operating assets on a company’s balance sheet, we question whether it is possible to distinguish between the ‘external financing anomaly’ documented by BRS and the ‘accrual anomaly’ first documented by Sloan (1996). We show that once controlling for total accruals, the relation between external financing activities and future stock returns is attenuated and not statistically significant. These findings are consistent with Richardson and Sloan (2003).
URI: http://hdl.handle.net/2451/27556
Appears in Collections:Accounting Working Papers

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