Value stocks earn higher returns than growth stocks on average, but a “value” position can turn against the investor. Fundamental analysis can explain this so-called value trap: the investor may be buying earnings growth that is risky. Both E/P and B/P, come into play: E/P (or P/E) indicates...

Calculations of the Implied Cost of Capital (ICC) typically fail on validation criteria. This paper provides an explanation. Though nominally working with accounting-based valuation models, the standard approach fails to recognize accounting principles that govern the accounting. Those...