The Journal of Finance

The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.

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The Cross‐Section of Realized Stock Returns: The Pre‐COMPUSTAT Evidence

Published: 12/01/1994   |   DOI: 10.1111/j.1540-6261.1994.tb04773.x

JAMES L. DAVIS

Using a database that is free of survivorship bias, this article finds that book‐to‐market equity, earnings yield, and cash flow yield have significant explanatory power with respect to the cross‐section of realized stock returns during the period from July 1940 through June 1963. There is a strong January seasonal in the explanatory power of these variables, even though small stocks are, by construction, excluded from the sample.


Characteristics, Covariances, and Average Returns: 1929 to 1997

Published: 03/31/2007   |   DOI: 10.1111/0022-1082.00209

James L. Davis, Eugene F. Fama, Kenneth R. French

The value premium in U.S. stock returns is robust. The positive relation between average return and book‐to‐market equity is as strong for 1929 to 1963 as for the subsequent period studied in previous papers. A three‐factor risk model explains the value premium better than the hypothesis that the book‐to‐market characteristic is compensated irrespective of risk loadings.