Anderson, Keith Philip orcid.org/0000-0002-6557-422X, Chowdhury, Anup and Uddin, Moshfique (2024) Piotroski's Fscore under varying economic conditions. Review of Quantitative Finance and Accounting. ISSN 0924-865X
Abstract
Piotroski’s Fscore has become increasingly important to investment managers and analysts as a simple measure of a company’s financial strength. However, how it changes over time, and in particular how it reacts under different economic conditions, has not been considered until now. Macroeconomic conditions and the business cycle affect corporate valuations via stock prices. They also affect corporate liquidity, cash flow, profitability, efficiency, financing, capital structure, and thus Fscores. The Fscore is currently used as if it gives similar results in all economic states, but this is not the case. While macroeconomic conditions strongly affect the aggregate Fscore, the effect of particular variables changes greatly depending on the stage of the economic cycle. During contractionary episodes, monetary and macro-economic factors become much more critical and outweigh firm-level factors in determining Fscore values. Investors should, therefore, be particularly cautious in applying the Fscore equally during contractions as during expansionary periods.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s) 2024 |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > The York Management School |
Depositing User: | Pure (York) |
Date Deposited: | 18 Jul 2024 12:10 |
Last Modified: | 18 Oct 2024 00:05 |
Published Version: | https://doi.org/10.1007/s11156-024-01331-y |
Status: | Published online |
Refereed: | Yes |
Identification Number: | 10.1007/s11156-024-01331-y |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:214946 |
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Description: Piotroski’s Fscore under varying economic conditions
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