Predictive capacity of profitability in companies in the capital market of Argentina

Dante Domingo Terreno (), Silvana Andrea Sattler and Enrique Leopoldo Castro González
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Dante Domingo Terreno: Universidad Nacional Córdoba, Argentina
Silvana Andrea Sattler: Universidad Nacional Córdoba, Argentina
Enrique Leopoldo Castro González: Universidad Nacional Córdoba, Argentina

Contaduría y Administración, 2018, vol. 63, issue 4, 11-12

Abstract: Fairfield and Yohn (2001) develop a simple and interesting model to predict the effects of profitability in the short term, based on current profitability and the components of Dupont. However, the importance and dissemination of this model has not been estudied in emerging economies. For this reason, document has as purpose to evaluate the predictive ability of the return on net operating assets, based on the above model in the Argentina capital market. The models checked show a strong process of mean reversion of returns, and only the rotation of the net operating assets allows the improvement in profitability in the next year. Instead, the profit margin increased rapidly reversed, determining a negative effect on profitability in the next year.

Keywords: Mean reversion; Financial accounting; Financial statement analysis. (search for similar items in EconPapers)
Date: 2018
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