'Asset Growth and Future Stock Returns: Inter-national Evidence': Author Response

摘要

Mr. Clunie makes a valid point, one with which we agree in general. Although not mentioned explicitly in our article, in an earlier FA) article (Xi Li and Rodney Sullivan, "The Limits to Arbitrage Revisited: The Accrual and Asset Growth Anomalies," July/August 2011), the authors called attention to the possibility that managers may seek to manage earnings through a variety of short-term approaches at the expense of long-term gain. For example, the asset growth effect is consistent with investor underappreciation of managerial empire building whereby financial executives are willing to pursue value-destroying capital investment activities. Our hope is that by calling attention to these issues, a better alignment of interests between investors and corporate managers will emerge.