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Stock Prices and Implied Abnormal Earnings Growth

Year 2014, Volume: 4 Issue: 1, 196 - 216, 01.03.2014

Abstract

In terms of corporate valuation, the frequently used heuristics are Price Earnings or Price Earnings to Growth ratios. The development of a valuation model of type Abnormal Earnings Growth Model including modeling of expected rents evolution, conditions compatible with perfect competition, allows us to propose a testable relationship between market value of share, expected earnings per share in a year, its rate of growth in short term and a set of accounting variables composing a synthetic indicator of growth of company. Our results show that (1) expected increase in earnings per share are significantly associated with stock prices for developed countries, (2) but, the persistence of its effects is limited for emerging countries, (3) when the dynamics of growth are more complex, inclusion of synthetic variable of can make a significant correction term (4) and the implied cost of capital is significantly higher for emerging countries than for developed countries.

Year 2014, Volume: 4 Issue: 1, 196 - 216, 01.03.2014

Abstract

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Details

Other ID JA97BB23EK
Journal Section Research Article
Authors

Hafiz İmtiaz Ahmad This is me

Pascal Alphonse This is me

Michel Levasseur This is me

Publication Date March 1, 2014
Published in Issue Year 2014 Volume: 4 Issue: 1

Cite

APA Ahmad, H. İ., Alphonse, P., & Levasseur, M. (2014). Stock Prices and Implied Abnormal Earnings Growth. International Journal of Economics and Financial Issues, 4(1), 196-216.
AMA Ahmad Hİ, Alphonse P, Levasseur M. Stock Prices and Implied Abnormal Earnings Growth. IJEFI. March 2014;4(1):196-216.
Chicago Ahmad, Hafiz İmtiaz, Pascal Alphonse, and Michel Levasseur. “Stock Prices and Implied Abnormal Earnings Growth”. International Journal of Economics and Financial Issues 4, no. 1 (March 2014): 196-216.
EndNote Ahmad Hİ, Alphonse P, Levasseur M (March 1, 2014) Stock Prices and Implied Abnormal Earnings Growth. International Journal of Economics and Financial Issues 4 1 196–216.
IEEE H. İ. Ahmad, P. Alphonse, and M. Levasseur, “Stock Prices and Implied Abnormal Earnings Growth”, IJEFI, vol. 4, no. 1, pp. 196–216, 2014.
ISNAD Ahmad, Hafiz İmtiaz et al. “Stock Prices and Implied Abnormal Earnings Growth”. International Journal of Economics and Financial Issues 4/1 (March 2014), 196-216.
JAMA Ahmad Hİ, Alphonse P, Levasseur M. Stock Prices and Implied Abnormal Earnings Growth. IJEFI. 2014;4:196–216.
MLA Ahmad, Hafiz İmtiaz et al. “Stock Prices and Implied Abnormal Earnings Growth”. International Journal of Economics and Financial Issues, vol. 4, no. 1, 2014, pp. 196-1.
Vancouver Ahmad Hİ, Alphonse P, Levasseur M. Stock Prices and Implied Abnormal Earnings Growth. IJEFI. 2014;4(1):196-21.