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Discussion of “How well do investors understand loss persistence?”

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  • Robert J. Resutek

    (Dartmouth College–Tuck School of Business)

Abstract

Li (Rev Acc Stud, 2011) proposes a quarterly earnings prediction model for loss generating firms, shows that it produces better specified future earnings estimates relative to naïve quarterly forecast models, and that it can be used to form a trading strategy that produces economically significant annual hedge returns. I discuss alternative perspectives on Li’s empirical results and suggest directions for future research.

Suggested Citation

  • Robert J. Resutek, 2011. "Discussion of “How well do investors understand loss persistence?”," Review of Accounting Studies, Springer, vol. 16(3), pages 668-678, September.
    • Handle: RePEc:spr:reaccs:v:16:y:2011:i:3:d:10.1007_s11142-011-9154-7
    DOI: 10.1007/s11142-011-9154-7
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    References listed on IDEAS

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    1. Karl B. Diether & Christopher J. Malloy & Anna Scherbina, 2002. "Differences of Opinion and the Cross Section of Stock Returns," Journal of Finance, American Finance Association, vol. 57(5), pages 2113-2141, October.
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    5. Fama, Eugene F. & French, Kenneth R., 2004. "New lists: Fundamentals and survival rates," Journal of Financial Economics, Elsevier, vol. 73(2), pages 229-269, August.
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    Keywords

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    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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