Using forecasts of earnings to simultaneously estimate growth and the rate of return on equity investment

• 成果类型: Article
• 署名作者: Easton, P; Taylor, G; Shroff, P; Sougiannis, T
• 署名单位: University System of Ohio; Ohio State University; University of Melbourne; University of Alabama System; University of Alabama Tuscaloosa; University of Minnesota System; University of Minnesota Twin Cities
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.00066
• 发表日期: 2002
• 页码: 657-676
• 关键词: Valuation

摘要

We develop a method for simultaneously estimating the cost of equity capital and the growth in residual earnings that are implied by current stock prices, current book value of equity, and short-term forecasts of accounting earnings. We demonstrate the use of our method by calculating the expected equity risk premium. Our estimate is higher than estimates in extant studies that are based on the same earnings forecast data. The main difference between our study and these papers is that while they provide arguments supporting an assumed rate of growth beyond the forecast horizon, we estimate this rate.