A comparison of Graham and Piotroski investment models using accounting information and efficacy measurement


  • Nusrat Jahan University of Akron, USA & University of Dhaka, Bangladesh
  • John J. Cheh The University of Akron
  • Il-woon Kim The University of Akron




Investment models, Ranking, Rebalancing periods, Screening.


We examine the investment models of Benjamin Graham and Joseph Piotroski and compare the efficacy of these two models by running backtest, using screening rules and ranking systems built in Portfolio 123. Using different combinations of screening rules and ranking systems, we also examine the performance of Piotroski and Graham investment models. We find that the combination of Piotroski and Graham investment models performs better than S&P 500. We also find that the Piotroski screening with Graham ranking generates the highest average annualized return among different combinations of screening rules and ranking systems analyzed in this paper. Overall, our results show a profound impact of accounting information on investor’s decision making.    

Author Biographies

  • Nusrat Jahan, University of Akron, USA & University of Dhaka, Bangladesh
    <p>Assistant Professor, Department of Accounting &amp; Information Systems,</p><p>University of Dhaka, Bangladesh</p><p>&amp; </p><p>Fulbright Scholar, The University of Akron, USA</p>
  • John J. Cheh, The University of Akron

    Professor, George W. Daverio School of Accountancy,

    College of Business Administration

  • Il-woon Kim, The University of Akron


    George W. Daverio School of Accountancy

    College of Business Administration


Abel, A. B. (1983). Optimal investment under uncertainty. The American Economic Review, 73(1), 228-233.

Barro, R. J. (1990). The stock market and investment. Review of Financial Studies, 3(1), 115-131. http://dx.doi.org/10.1093/rfs/3.1.115

Belmonte, J. (2015). Buffett and beyond: Uncovering the secret ratio for superior stock selection. John Wiley & Sons.

Benjamin VanMetre. (2014). 401(K)-style retirement plans are the new normal; illinois should get on board. Retrieved from https://www.illinoispolicy.org/401k-style-retirement-plans-are-the-new-normal-illinois-should-get-on-board/

Cara Scatizzi. (2010). Adjusting for the real world: Testing variations of piotroski's screen. AAII Journal, April, 01 December 2014.

Graham, B., Dodd, D. L. F., & Cottle, S. (1934). Security analysis. McGraw-Hill New York.

Graham, B., & Zweig, J. (2003). The intelligent investor. Harper Business Essentials.

Greenwald, B. C., Kahn, J., Sonkin, P. D., & Van Biema, M. (2004). Value investing: From graham to buffett and beyond. John Wiley & Sons.

Jaconetti, C. M., Kinniry, F. M., & Zilbering, Y. (2010). Best practices for portfolio rebalancing. Vanguard Research, July, 2010.

James, P., Cheh, J. J., & Kim, I. (2014). A comparative analysis on performance of seven all star investment models. Pan-Pacific Journal of Business Research, 5(2), 23.

Kogan, L., & Papanikolaou, D. (2013). Firm characteristics and stock returns: The role of investment-specific shocks. Review of Financial Studies, 26(11), 2718-2759. http://dx.doi.org/10.1093/rfs/hht026

Liu, H. (2014). Solvency constraint, underdiversification, and idiosyncratic risks. Journal of Financial & Quantitative Analysis, 49(2), 409-430. http://dx.doi.org/10.1017/S0022109014000271

North, D. S., & Stevens, J. L. (2015). Investment performance of AAII stock screens over diverse markets. Financial Services Review, 24(2), 157-176.

Piotroski, J. D. (2000). Value investing: The use of historical financial statement information to separate winners from losers. Journal of Accounting Research,1-41. nhttp://dx.doi.org/10.2307/2672906