Kothari, S.P.; Loutskina, E.; Nikolaev, V. - Tilburg University, Center for Economic Research - 2006
We show that the agency theory of overvalued equity (see Jensen, 2005) rather than investors' fixation on accruals … explains the accrual anomaly, i.e., abnormal returns to an accrual trading strategy (see Sloan, 1996).Under the agency theory … returns.In addition, consistent with the predictions of the agency theory of overvalued equity, we find high, but not low …