Does q-theory with investment frictions explain anomalies in the cross section of returns ? $

@inproceedings{Li2010DoesQW,
  title={Does q-theory with investment frictions explain anomalies in the cross section of returns ? \$},
  author={Dongmei Li and Lu Zhang},
  year={2010}
}
Q-theory predicts that investment frictions steepen the relation between expected returns and firm investment. Using financing constraints to proxy for investment frictions, we show only weak evidence that the investment-to-assets and asset growth effects in the cross section of returns are stronger in financially more constrained firms than in financially less constrained firms. There is no evidence that q-theory with investment frictions explains the investment growth, net stock issues… CONTINUE READING
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