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Expected vs. real growth of companies listed on the London Stock Exchange

Author

Listed:
  • Piotr Pietraszewski

    (University of Lodz)

  • Agata Gniadkowska-Szymańska

    (University of Lodz)

  • Monika Bolek

    (University of Lodz)

Abstract

The aim of this paper is related to the growth opportunity measures representing the expected growth and their relationship with the real growth of companies. The motivation for this research is based on the evidence that growth opportunity measures may fail to predict future growth as measured by earnings per share. In the presented paper the companies listed on LSE are divided for two groups depending on the market they are traded: FTSE100 index and AIM all-share index. It was found that in both samples the growth opportunity measures relationship with the real growth is significant. The difference between companies listed on the main and alternative markets may influence the efficiency of growth opportunity measures predicting the future growth, and therefore the samples should be analyzed separately. The methods applied in this paper include the correlation analysis between growth opportunity and real growth variables, panel data OLS models with fixed effects and the differences between the correlation and regression tests. It can be concluded that growth opportunity measures predict the growth of companies as measured by EPS.

Suggested Citation

  • Piotr Pietraszewski & Agata Gniadkowska-Szymańska & Monika Bolek, 2023. "Expected vs. real growth of companies listed on the London Stock Exchange," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 47(3), pages 646-668, September.
    • Handle: RePEc:spr:jecfin:v:47:y:2023:i:3:d:10.1007_s12197-023-09623-0
    DOI: 10.1007/s12197-023-09623-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Growth opportunity; Growth of companies; Small and mature companies;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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