pleasehelpmetotranslatethisparagraghsFreemanandTsearguedunexpectedprofits-returnswouldbebetterexplainedbyanS-shapedarctanrelationshipwhichisconvexforbad-newsfrimsandconcaveforgood-newsfirms.Figure9.4providesanillust
pleasehelpmetotranslatethisparagraghs
FreemanandTsearguedunexpectedprofits-returnswouldbebetterexplainedbyanS-shapedarctanrelationshipwhichisconvexforbad-newsfrimsandconcaveforgood-newsfirms.Figure9.4providesanillustrationofsomehypothesisednon-linearrelationships.Measuringunexpectedearnings(profits)asdeviationsfrommedianquarterlyanalystforecasts,FreemanandTsefoundthattheapplicationofthenon-lineararctanmodelresultedinincreasedERCsandgreaterpredictivepowerinthefprmofhigheradjustedsimplelinearmodelsmayhavemisspecifiedtheprofits-returnsrelationship.