Bloated balance sheets and stock returns: Asymmetries between profit and loss firms

Authors

  • Georgios A. Papanastasopoulos University of Piraeus Department of Business Administration

DOI:

https://doi.org/10.17811/ebl.8.1.2019.53-61

Abstract

We study return predictability attributable to bloated balance sheets in European capital markets and find that the NOA anomaly is more severe across loss firms and is significantly attenuated across profit firms. A hedge trading strategy on NOA for loss firms generate large raw and abnormal returns that are almost three times higher than the respective returns for profit firms. Our evidence is more likely to be consistent with the hypothesis that low NOA firms may have superior returns relative to high NOA firms due to investors’ inability to make full use of information reported in financial statements.

Author Biography

Georgios A. Papanastasopoulos, University of Piraeus Department of Business Administration

Dr. Georgios Papanastasopoulos is Assistant Professor in Accounting at the Department of Business Administration of the University of Piraeus, where he teaches both at the undergraduate and the postgraduate level. Further, he is teaching as a Visiting Lecturer courses in accounting at the Department of Business Administration of the Athens University of Economics and Business (MBA program), at the Hellenic Open University, at the Department of Banking and Financial Management of the University of Piraeus (both at the undergraduate and postgraduate program) and at the Department of Industrial Management of the University of Piraeus (undergraduate program).

 

He has a ptyhion from the Department of Industrial Management of the University of Piraeus. He holds an M.Sc and a Ph.D from the Department of Banking and Financial Management of the University of Piraeus.

 

Ηe has also taught as a Visiting Lecturer accounting courses at the Department of Banking and Financial Management of the University of Piraeus (both at the undergraduate and postgraduate program), at the Department of Economics of the National & Kapodistrian University of Athens (undergraduate program), at the School of Electronic and Computer Engineering of the National Technical University of Athens (postgraduate program), at the Department of Economics of the University of Peloponnese (undergraduate program),  at the Hellenic Open University (postgraduate program in Banking), at the Department of Accounting of Technological Institute of Piraeus (postgraduate program) and at the Department of Accounting of Technological Institute of Crete (postgraduate program).

 

His research interests are focused on financial accounting, cost accounting and managerial accounting. His work has been published at various academic journals (Economics Letters, European Accounting Review, European Financial Management, British Accounting Review, Finance Research Letters, Investment Management and Financial Innovations, International Journal of Accounting, International Review of Financial Analysis, Management Decision, North American Journal of Economics and Finance, Journal of Economic Studies, Journal of International Financial Markets, Institutions & Money, Review of Accounting and Finance, International Journal of Accounting, Auditing and Performance Evaluation, Mathematical and Computer Modelling) and presented at international conferences. He is also referee at academic journals and research programs. Finally, he has worked as Assistant External Auditor in a big audit firm.

 

References

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Published

2019-02-25

How to Cite

Papanastasopoulos, G. A. (2019). Bloated balance sheets and stock returns: Asymmetries between profit and loss firms. Economics and Business Letters, 8(1), 53–61. https://doi.org/10.17811/ebl.8.1.2019.53-61

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Articles