The value of growth: changes in profitability and future stock returns

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dc.coverageDOI: 10.1016/j.jbankfin.2023.107036
dc.creatorLim, Bryan
dc.creatorSotes-Paladino, Juan
dc.creatorWang, George Jiaguo
dc.creatorYao, Yaqiong
dc.date2024
dc.date.accessioned05-01-2026 18:14
dc.date.available05-01-2026 18:14
dc.description<p>We use a simple two-stage dividend growth model to connect profitability growth and firm scale to stock returns. In this framework, both the magnitude and the length of the first-stage growth play a key role in determining returns. Using current profitability growth to estimate magnitude and firm scale as inverse proxy for length, we predict that future returns should increase with current profitability growth but, crucially, the effect should diminish with firm scale. Across a range of empirical tests, we find strong evidence in support of our model determinants and predictions. Our findings are not explained by an array of associated, potentially confounding variables.</p>eng
dc.identifierhttps://investigadores.uandes.cl/en/publications/1539a76b-7939-4a26-b5ea-daae026f6fd3
dc.languageeng
dc.rightsinfo:eu-repo/semantics/openAccess
dc.sourcevol.158 (2024) p.1-16
dc.subjectFirm size
dc.subjectProfitability growth
dc.subjectStock returns
dc.titleThe value of growth: changes in profitability and future stock returnseng
dc.typeArticleeng
dc.typeArtículospa
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