where Priceit is the stock price per share of firm i at the end of year t, BVPSit is the book
value of shareholders' equity of firm i at the end of year t, REPSit is the residual earnings per
share, which is equal to EPSit
ÿr*(BVPSt ÿ 1)4 (proxy for expected REPS in period t+1),
EPSit is the earnings per share of firm i for year t, and r is the country's average commercial
lending rate in year t taken from the International Financial Statistics Yearbook.