A Deep Dive Into Earnings Quality with Columbia Professor Doron Nissim
Excess Returns
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Evaluating the Sustainability of the Earnings
When we have a lot of property plan and equipment, there is much more potential for error or manipulation. If you have more property plan than equipment, the distortion from historical cost accounting are going to be more significant. So these are also relevant factors that tell us something about whether the earnings are sustainable or not. And if you think about factors that are out of the firm's control completely, they industry that you operate in or what is going on with the economy.
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