Abundant research shows that the feature of corporate financial results is the long-term reversion toward the levels average for the whole economy. In the case of earnings this means that companies which in a given year show above-average profitability in the following periods express the...

A series of popular stock investment strategies are based on buying stocks with low valuation multiples. These strategies assume that low multiples signal undervaluation. However, the low multiples can be justified by fundamentals. In such cases even stocks with very low multiples can be...

Capital markets appreciate stability. It means that companies reporting smooth earnings patterns tend to be priced relatively high. However, the empirical issue is whether such valuation premiums for earnings smoothness are justified. We examine the relationships between past five-year earnings...