BUSI 4502 Lecture Notes - Lecture 7: Growth Investing, Growth Stock, Agency Cost
30 Aug 2018
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Document Summary
On average, value and growth investment strategies outperform growth investment strategies. This outperformance is relatively more obvious in small capitalization stocks and present in equity markets outside us as well. The high returns have resulted value and growth-investing being widely recognized distinctive specialization adopted by money managers. Previous studies have attempted to identify factors that contributed to high return of value strategies. Some studies attributed the high return to cognitive biases from investor behavior and agency cost of delegated investment management and some state that higher risk of value stock will result in higher return. Hence, this study is to determine if such findings are still consistent. The authors review and update the empirical academic research on value and growth investing. The authors began the study by combining the 3 previous studies" empirical result, which are. Fama and french (1992), kakonishok, shleifer and bishny (1994) and chan, hamao and lakonishok (1991). The bulk previous research ended at mid 1990s.
