Does Sustainable Growth Rate Style of Investment Deliver Superior Equity Return? : An Evidence
Keywords:
Sustainable growth rate, Return on equity, Retention ratioAbstract
The present paper makes an attempt to evaluate whether sustainable growth rate style of investment deliver superior equity returns or not. The study provides evidence that companies with high sustainable growth rate can deliver superior equity returns in the third and fifth year of investment. However, the portfolio of stocks constructed on this style of investment has generated negative return in the first year. Thus the study concludes that, the sustainable growth style of investment delivers superior equity returns provided investors stay invested for a minimum period of three years and a maximum period of five years.
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