Recent research in accounting has documented a dramatic increase in the number of firms reporting losses. This increase in losses calls into question the value relevance of earnings numbers. If a firm is likely to be abandoned, its book value will be more relevant than the magnitude of its loss...

Recent empirical research has documented a substantial decrease in average accounting profitability. The phenomenon appears inconsistent with the observation that corporate profit as a fraction of national income as remained stable. This paper shows that the downward trend is fully explicable by...

Recent research in accounting has documented a substantial increase in the number of loss firms. Existing theories on the valuation of loss firms are based on adaptation/abandonment options or limited liability, assuming that these firms are operationally distressed. In this paper, we show that...