What question did this study set out to answer?

This research aims to analyze how earnings yields affect the connection between annual accounting income and security prices.

The Effect of Earnings Yield on Assessments of the Association Between Annual Accounting Income Numbers and Security Prices.

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This analysis finds a relationship between earnings yields and security price adjustments, indicating potential market frictions.

This research aims to analyze how earnings yields affect the connection between annual accounting income and security prices.
Examined the relationship between earnings yield and annual income numbers.
Analyzed two alternative views on the association within a normative model.
Conducted empirical analysis to evaluate the degree of association.
Found that the association between annual income and security prices is influenced by earnings yields.
Indicated possible frictions in the security price adjustment process.
Suggested that existing market equilibrium models may be mis-specified.

Sanjoy Basu (1978) studied this question.

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