The Northern Finance Association, which consists of finance academics from Canada and around the world, organizes a forum every fall where finance academics, PhD students and professionals present and discuss the latest research in the field.
In his paper, “Do Cash Flows of Growth Stocks Really Grow Faster?”, Assistant Professor Chen questions a commonly held belief that growth stocks have substantially higher cash-flow growth rate compared to value stocks. Chen’s research shows this assumption is not actually supported by data and that often, the opposite case is true.
Academics tend to think that growth stock is related to high prices, says Chen, while practitioners often believe that the growth stocks’ cash flows are expected to grow faster in the future. But “the results suggest that the two notions of growth stocks are not the same,” he says.