The Effect of Capital Investment on Stock Return: The Industry Analysis
Date Issued
2016
Date
2016
Author(s)
Liou, Yu-Ting
Abstract
Several past studies examine the relation between capital investments and cross-sectional stock returns (e.g., Titman, Wei and Xie, 2004, and Pontiff and Woodgate, 2008). Most of the studies draw a conclusion that capital investments are inversely related to of stock returns. Intuitively, the importance and necessity of capital investments could be very different. However, there is little studies that focus on the industrial analysis. Therefore, this paper tries to figure out the role of industry, which affects the patterns of stock returns and capital investments. The conclusion is, briefly speaking, that the effect of capital investments on future stock return remains valid for most of industries, with few exceptions such as consumer durables and business equipment under twelve classifications.
Subjects
cross-sectional stock return
capital expenditure
capital investment
industry analysis
Type
thesis
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