Paper Title
Do Mature Firms have More Earnings Informativeness? Evidence From Taiwan

Previous studies have demonstrated that higher levels of individual trading are more subject to decision biases, thereby causing market mispricing and inefficiency. This study examines how the Taiwan stock exchange market, which is characteristic of higher levels of individual trading, prices earnings information across different life cycle stages. Our findings indicate that earnings persistence and value relevance are conditional on the life cycle. In addition, we examine the market valuation consequences of the life cycle stage, finding that positive future excess returns are earned for mature and shakeout firms. Our findings indicate that a profitable trading strategy is possible when the market does not fully recognize the fundamental life cycle information embodied in the financial statements in Taiwan. Index Terms- life cycle; earnings quality; market mispricing; trading strategy.