Size, size potential, and expected stock returns: In memory of Simon Benninga

Abstract The financial literature shows that, on average, larger firms earn lower returns. This study examines the relationship between market capitalization and stock returns, as well as the size growth potential of firms according to their economies of scale ( size and size potential are not corre...

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Bibliographic Details
Published in:The Journal of corporate accounting & finance 2021-10, Vol.32 (4), p.27-30
Main Author: Taussig, Roi D.
Format: Article
Language:English
Subjects:
Economies of scale
Stock prices
Citations: Items that this one cites
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Summary:Abstract The financial literature shows that, on average, larger firms earn lower returns. This study examines the relationship between market capitalization and stock returns, as well as the size growth potential of firms according to their economies of scale ( size and size potential are not correlated). According to generally accepted beliefs, larger firms do earn lower returns on average. This study adds to the literature by finding that firms’ size potential (according to their economies of scale ) is also negatively related to firms' average returns. This new information is significant–both statistically and economically.
ISSN:1044-8136
1097-0053
DOI:10.1002/jcaf.22516