Net stock issuance anomaly and cash flow explanation: a research note

Alan Meng Li, Dharmendra Naidu, Farshid Navissi, Kumari Ranjeeni

Research output: Contribution to journalArticleResearchpeer-review


Prior studies show that net stock issuance is negatively associated with the cross section of future stock returns, reflecting a market anomaly. Our study provides empirical evidence on whether cash flow can mitigate such anomaly. Consistent with prior research, we initially provide evidence of the anomaly in our sample and that the anomaly persists in the presence of cash flow. We then decompose net stock issuance into stock issues and stock repurchases and find that the anomaly is only driven by stock issues but not stock repurchases and that the stock issues’ anomaly persists even in the presence of cash flow.

Original languageEnglish
Pages (from-to)286-304
Number of pages19
JournalAustralian Journal of Management
Issue number2
Publication statusPublished - 1 May 2018


  • Cash flow
  • net stock issuance anomaly
  • stock issue
  • stock repurchase

Cite this