Discussion of 'How Well Do Investors Understand Loss Persistence?'

Resutek, Robert J.

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Discussion of 'How Well Do Investors Understand Loss Persistence?'

Review of Accounting Studies, Vol. 16, No. 3, 2011

Tuck School of Business Working Paper No. 2011-98

15 Pages Posted: 15 May 2011 Last revised: 31 Aug 2011

See all articles by Robert J. Resutek

Robert J. Resutek

University of Georgia - J.M. Tull School of Accounting

Date Written: April 1, 2011

Abstract

Li (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.

Keywords: Earnings forecasts, return anomalies, loss persistence

JEL Classification: G24, G29, M41

Suggested Citation: Suggested Citation

Resutek, Robert J., Discussion of 'How Well Do Investors Understand Loss Persistence?' (April 1, 2011). Review of Accounting Studies, Vol. 16, No. 3, 2011, Tuck School of Business Working Paper No. 2011-98, Available at SSRN: https://ssrn.com/abstract=1832502