Abstract
We investigate the relations between accruals, operating profitability, cash-based operating profitability, and the cross-section of expected stock returns in U.S. and Chinese markets. By replicating the main results in Ball et al. (2016 JFE), we confirm that cash-based operating profitability subsumes the return predictability of accruals and operating profitability in the U.S. market. Extending to the Chinese market, we similarly find that operating profitability and cash-based profitability can both predict returns but in contrast, operating profitability subsumes cash-based profitability.
Original language | English |
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Article number | 101336 |
Journal | Pacific Basin Finance Journal |
Volume | 61 |
DOIs | |
Publication status | Published - Jun 2020 |
Keywords
- Accruals
- Cash-based operating profitability
- Operating profitability
- Return predictability
ASJC Scopus subject areas
- Finance
- Economics and Econometrics