Dissecting Anomalies with a Five-Factor Model

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ID: 303075
2015
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Abstract
A five-factor model that adds profitability (RMW) and investment (CMA) factors to the three-factor model of Fama and French (1993) suggests a shared story for several average-return anomalies. Specifically, positive exposures to RMW and CMA (stock returns that behave like those of profitable firms that invest conservatively) capture the high average returns associated with low market β⁠, share repurchases, and low stock return volatility. Conversely, negative RMW and CMA slopes (like those of relatively unprofitable firms that invest aggressively) help explain the low average stock returns associated with high β⁠, large share issues, and highly volatile returns. Received November 11, 2014; accepted April 27, 2015 by Editor Andrew Karolyi.
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openalex_W3122516690 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Eugene F. Fama, Kenneth R. French
Journal review of financial studies
Year 2015
DOI
10.1093/rfs/hhv043
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