Review of stock returns

摘要

Growth in Capital expenditures also explicates returns to the portfolio and the cross section of future stock returns. Companies that substantially enlarge capital investments afterward achieve negative benchmark-adjusted returns. The negative capital investment and return relation observed stronger for firms that have greater investment prudence, i.e., firms that have higher cash flows and lower debt ratios, and is exposed to be considerable only in time periods when aggressive takeovers were less common. Firms that amplify capital investments supposed to have high past return and issue equity at the same time as the negative capital investment and return is free of the long term return reversal and secondary equity issue anomalies.