We find that a favorable (unfavorable) valuation effect for high (low) pricing power firms that are able (unable) to recover tax payments by reducing costs and/or charging higher prices. These findings are robust to alternative measures of valuation (price and returns), as well as long and short...

Purpose – This study investigates the relations between long-window stock returns and prior years' increases in DuPont identity components: profit margin and asset turnover. In particular, we examine the relative effectiveness of profit margin and asset turnover to predict years ahead stock...