If accounting academics should be able to contribute meaningfully to any branch of financial economics research, that branch is fundamental analysis. Our primary job is to teach students fundamental constructs such as value and income, how these constructs are measured under GAAP, and how they fit into the overall accounting framework. While we share the job of teaching fundamental analysis with corporate finance academics, our day-to-day immersion in the fundamentals provides a distinct perspective and considerable comparative advantages in the latter job.

In my view, however, our cumulative research on fundamental analysis barely exploits these comparative advantages. I suspect one of the reasons I was asked to write this perspective piece is that I am a sufficiently depreciated accounting asset to remember the excitement among market-based accounting researchers when, through a highly influential series of papers beginning around 1980, Jim Ohlson and various coauthors developed and persuasively communicated a theoretical...

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