Review of Accounting Studies

, Volume 16, Issue 3, pp 668–678 | Cite as

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

  • Robert J. Resutek


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.


Earnings forecasts Return anomalies Loss persistence 

JEL classification

G24 G29 M41 



I thank Jon Lewellen for helpful comments.


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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Dartmouth College–Tuck School of BusinessHanoverUSA

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