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

By Peter D. Easton, Gary K. Taylor, Pervin K. Shroff, Theodore Sougiannis. 2002

294 citations recorded by the source corpus.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/19966f1ebe812655b5721655ac35a9975f5f842d

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Citations in the corpus

Corporate Environmental Responsibility and the Cost of Capital: International Evidence (2016, background): “In columns 8 and 9we re-estimate the baseline regressions employing alternative growth assumptions because cost of equity estimates are sensitive to the underlying assumptions (Easton et al. 2002).”
The Effect of Accounting Restatements on Earnings Revisions and the Estimated Cost of Capital (2004, unknown): “Easton et al. (2002) also provide a transformation to approximate the expected growth in earnings (which is more comparable to the IBES long-term growth forecast) after the growth in residual income has been estimated.”
Accounting Disclosure and Real Effects (2007, unknown): “See Easton et al. (2002) and Gebhardt et al. (2001).”
An Evaluation of Accounting-Based Measures of Expected Returns (2005, background): “Furthermore, we cannot assess the accuracy of estimates of the expected rate of return that are specifically designed for large portfolios of observations (such as, Easton et al. 2002; O’Hanlon and Steele 2000).”
Company reputation and the cost of equity capital (2014, unknown): “Appendix 1: Measurement of the cost of equity: the portfolio approach Following Easton et al. (2002), we simultaneously estimate the cost of equity and the residual income growth rate using all observations in the full sample or in the ‘‘Most Admired’’ subsample.”
Estimating the Cost of Capital Implied by Market Prices and Accounting Data (2009, background): “3The example is the same as that in Easton et al. (2008).”
Residual Income Risk, Intrinsic Values, and Share Prices (2003, result): “Preinreich (1938), Edwards and Bell (1961), Peasnell (1982), Ohlson (1995), and others show that, as long as forecasts of earnings, book values, and dividends follow clean surplus accounting, the dividend valuation model is equivalent to the residual income valuation model: (1) [V.sub.t] =…”
Corporate Social Responsibility and Firm Value: Disaggregating the Effects on Cash Flow, Risk and Growth (2013, methodology): “El Ghoul et al. (2011) adopt a different approach to determine the implied cost of capital, and follow Hong and Kacperczyk (2009) in applying the theoretical work of Heinkel et al. (2001) that proposes that firm-specific risk might also be an influence on the cost of capital.”
Shareholder rights, financial disclosure and the cost of equity capital (2006, methodology): “Prior studies use either the forecasted earnings for the next two fiscal years without adjusting them to the next two 12-month periods (e.g., Gebhardt et al., 2001; Gode and Mohanram, 2003), or they limit observations to firms with fiscal year ends in December and estimate the cost of equity capital”
Properties of implied cost of capital using analysts’ forecasts (2011, unknown): “1 Also see Easton et al. (2002), Easton (2004), and Botosan and Plumlee (2005). 2 A decline in the cost of capital simultaneously with a sharp rise in stock price or an increase in the cost of capital simultaneously with a fall in the stock price, is also predicted on economic grounds in an efficien”
Estimating the Intertemporal Risk-Return Tradeoff Using the Implied Cost of Capital (2006, unknown): “20As in Easton et al. (2002), we use an initial ICC estimate of 12% to compute the ratio of aggregate four-year cum-dividend earnings to book value of equity.”
Cross-sectional variation in the economic consequences of international accounting harmonization: The case of mandatory IFRS adoption in the UK ☆ (2007, methodology): “To achieve this, we need to estimate the changes of implied cost of equity on an individual-company basis instead of using the approach that Easton et al. (2002) suggest.”