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Way back in 1934, Graham and Dodd observed the importance of earning power in investment theory. According to them, history of actual earning with a reasonable expectation should be approximated in future. The empirical study of Ball and Brown (1968) contends that of all the sources of...
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Our analyses are based on the observation that the portion of change in enterprise value captured in earnings differs according to the source of value change. These sources are: (1) cash flows to/from debt holders, equity holders, and/or cash reserves; and, (2) changes in value of assets in...
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