Accounting anomalies and fundamental analysis: An alternative view

Jonathan Lewellen

Journal of Accounting and Economics, 2010, vol. 50, issue 2-3, 455-466

Abstract: The literature on accounting anomalies and fundamental analysis provides important insights into the behavior of stock prices and the relation between accounting numbers and firm value. My review discusses five key topics from this literature: (1) discriminating between risk and mispricing explanations for return anomalies; (2) estimating the implied cost of capital; (3) inferring investors' perceptions of the earnings process; (4) understanding the importance of trading costs and firm size; and (5) improving the construction of characteristic-based trading strategies. My discussion highlights important challenges facing the literature and offers suggestions for improving empirical tests.

Keywords: Accounting; anomalies; Mispricing; Cost; of; capital; Mishkin; tests; Earnings; and; returns (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (33)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:50:y:2010:i:2-3:p:455-466

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