Spotting Bubbles with ΔNOA Analysis

Can accounting spot bubbles? <break time="1.0s" /> Fama asked for proof. <break time="1.0s" /> Bubbles = big run‑ups, sharp falls. <break time="1.0s" />

Look at industries. <break time="1.0s" /> Add accounting: ΔNOA. <break time="1.0s" /> ΔNOA = change in Net Operating Assets. <break time="1.0s" />

It captures overinvestment. <break time="1.0s" /> 240 run‑ups. 49 countries. 1992–2020. <break time="1.0s" /> High ΔNOA → more

crashes. <break time="1.0s" /> High ΔNOA → lower 2‑year returns. <break time="1.0s" /> Low ΔNOA: +16%. High ΔNOA: −3.8%. <break time="1.0s" />

Controls applied. <break time="1.0s" /> False discovery passed. <break time="1.0s" /> Out‑of‑sample works. AUC ~0.73. <break time="1.0s" />

Sentiment lifts ΔNOA. <break time="1.0s" /> Earnings later disappoint. <break time="1.0s" /> Strongest during run‑ups. <break time="1.0s" />

Not a generic effect. <break time="1.0s" /> Industry bubbles hit markets. <break time="1.0s" /> Country returns weaken. <break time="1.0s" />

Track ΔNOA in fast run‑ups. <break time="1.0s" /> Pair with volatility and issuance. <break time="1.0s" /> Industry‑level signal,