Exploring the nexus between Accounting Anomalies, Stock Returns, and Growth: A Study of KSE-100 Companies


  • Muhammad Haroon Rasheed University of Sargodha
  • Tayyaba Zahid CUST Islamabad
  • Salma Sadiq COMSATS University WAH


Accounting Anomalies, Stock Return, Investment Decisions, Pakistan Stock Exchange


Purpose: Predicting stock movement is of vital interest to managers and investors. The study aims to validate a similar model by identifying accounting variables that significantly predict the stock return at Pakistan Stock Exchange (PSX).

Design and Methodology: The study utilized panel data extracted from the financial statements of nonfinancial firms included in the KSE-100 index from 2005 to 2020. A pooled regression model with a fixed effect for basic variables and a random effect for anomaly variables is used to test their impact on future stock returns.

Findings: The regression analysis indicates that there exists a significant impact of basic accounting variables in forecasting expected return, return yield and return growth. The results for anomaly variables also significantly predict expected return and yield but are unable to predict earning growth significantly.

Implications: The proposed model provides a tool for investors to take advantage of any mispricing existing in the stock market. The study statistically linked accounting anomaly variables with stock returns at Pakistan Stock Exchange. In a developing economy like Pakistan, where market mispricing is high this knowledge can be utilized by researchers, managers, and policymakers to foresee the direction of the business sector in Pakistan.


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How to Cite

Muhammad Haroon Rasheed, Tayyaba Zahid, & Salma Sadiq. (2022). Exploring the nexus between Accounting Anomalies, Stock Returns, and Growth: A Study of KSE-100 Companies. UW Journal of Management Sciences, 6(1), 95–113. Retrieved from https://uwjms.org.pk/index.php/uwjms/article/view/69