We hypothesize that earnings downside risk, capturing the expectation for future downward operating performance …, contains distinct information about firm risk and varies with cost of capital in the cross section of firms. Consistent with … the validity of the earnings downside risk measure, we find that, relative to low earnings downside risk firms, high …

I implement the accounting-based risk measurement approach in equity valuation proposed by Nekrasov and Shroff (2009 … this risk measurement approach produce a significantly smaller valuation inaccuracy relative to the market-based approach … intrinsic value estimate based on the accounting approach. Additionally, the estimated risk can be transformed to obtain …