Value and growth investing: Review and update

Louis K.C. Chan, Josef Lakonishok

Research output: Contribution to journalReview articlepeer-review


A great deal of academic empirical research has been published on value and growth investing. We review and update this literature, discuss the various explanations for the performance of value versus growth stocks, review the empirical research on the alternative explanations, and provide some new results based on an updated and expanded sample. The evidence suggests that, even after taking into account the experience of the late 1990s, value investing generates superior returns. Common measures of risk do not support the argument that the return differential is a result of the higher riskiness of value stocks. Instead, behavioral considerations and the agency costs of delegated investment management lie at the root of the value-growth spread.

Original languageEnglish (US)
Pages (from-to)71-86
Number of pages16
JournalFinancial Analysts Journal
Issue number1
StatePublished - 2004

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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