// STUDY RESULT · 1998-01 TO 2026-09

Inspired by Bradshaw, Richardson and Sloan: External Financing

TRADE-OFF

Net cash raised from outside investors can signal weak future profitability or overly optimistic valuation. Aggregating debt and equity financing avoids treating one funding channel in isolation.

How this run differs from the source: Equity issuance by share count only; the paper's measure adds debt financing and dividends, scaled by assets.

	THE STRATEGY	$SPXTR BUY & HOLD
CAGR	12.9%	9.3%
Sharpe ratio	0.72	0.66
Max drawdown	-59.3%	-50.9%

// GROWTH OF $1, LOG SCALE

AMBER: THE STRATEGY · GREY: $SPXTR BUY & HOLD

Out-of-sample (from the split): CAGR 12.2% against 14.0% for the benchmark; Sharpe 0.77 in-sample, 0.66 out-of-sample.

After 25 bps of trading costs: 11.4% a year. WITHIN RANDOM

// DECADE BY DECADE

ERA	STRATEGY	BENCHMARK
1990s	-2.8%	20.9%
2000s	14.0%	-0.8%
2010s	15.9%	14.0%
2020s	11.8%	15.2%

// YEAR BY YEAR, LOSING YEARS IN RED

1998*-0.5%27.2%

1999-3.3%21.0%

200031.1%-9.1%

200130.5%-11.9%

2002-10.5%-22.1%

200341.7%28.7%

200443.3%10.9%

200511.3%4.9%

200621.7%15.8%

2007-2.3%5.5%

2008-39.3%-37.0%

200956.3%26.5%

20105.5%15.1%

20113.9%2.1%

201229.1%16.0%

201349.3%32.4%

20144.9%13.7%

20150.4%1.4%

201635.3%12.0%

201725.7%21.8%

2018-11.3%-4.4%

201926.2%31.5%

202013.5%18.4%

202128.2%28.7%

2022-12.1%-18.1%

202325.7%26.3%

202419.1%25.0%

2025-1.8%17.9%

2026*9.0%11.8%

Losing years: 1998 (-0.5%), 1999 (-3.3%), 2002 (-10.5%), 2007 (-2.3%), 2008 (-39.3%), 2018 (-11.3%), 2022 (-12.1%), 2025 (-1.8%). Each cell: the strategy, then the benchmark below it. * a part year.

// THE IDEA, AS PUBLISHED

Bradshaw, Richardson & Sloan (2006), Journal of Accounting and Economics · 2006

Use the cash-flow statement to calculate net cash flow from financing activities, including issuance, repayment, repurchase, and distribution flows.
Scale net external financing by total assets using information available after the annual report.
Rank annually; favor net distributors or low-financing firms and avoid or short the highest-financing firms.

RUN IT YOURSELF ▸ IN THE LIBRARY

A real computation on the QuantGPT warehouse, walk-forward. A study across the whole market includes only part of the companies that later delisted from 1998 (survivors only before); a study on your own list of tickers is not affected. Gross returns, no costs except where stated. Past performance is not a promise. Findings, not advice. COMPUTED 2026-11-08 21:57 ON THE QUANTGPT WAREHOUSE. COMPANIES THAT LATER DELISTED ARE ONLY PARTLY IN THIS UNIVERSE (A FIX IS IN PROGRESS), SO THE RESULT LEANS TOWARD SURVIVORS. FUNDAMENTALS BY FILING DATE. NOT INVESTMENT ADVICE. PRIVACY