Finance Professor Cited in Investors Chronicle on the Demise of Growth Stocks
Dec. 13, 2019
Kathleen Kahle, Thomas C. Moses Professor of Finance in the Eller College of Management at the University of Arizona, was cited in a December 10 Investors Chronicle article [subscription required] and a December 24 MarketWatch article on why investment in growth stocks is falling.
The article notes that investors are more willing to pay higher prices for safe, established companies than they are for growth stocks. Some researchers attribute investors’ hesitance to a recent drop in research and development productivity. The theory is that the ideas supporting growth companies aren’t as “good as they were 20 years ago.” Research by Kahle demonstrates that most modern growth companies prefer to secure funds through private equity.
“There are fewer listed companies today than there were a few years ago,” says Kahle in the article. “And those that are on the market tend to be older and more cash-rich. That is, less like growth stocks.”
Publicly listed companies have been shown to be more inefficient and wasteful, and growth in sales often lags behind growth in assets. Kahle’s research confirms that many companies solve this problem by staying private.
Kahle joined the Eller College as associate professor in 2003 and was appointed the Thomas C. Moses Professor in Finance in 2014. Her research interests include corporate finance, capital structure, securities issues, repurchases and insider trading. Kahle earned her PhD in finance from the Ohio State University in 1996.