Pe Ratios, Peg Ratios, and Estimating the Implied Expected Rate of Return on Equity Capital

By Peter D. Easton. 2003

1,627 citations recorded by the source corpus.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/6c39617ed81e41b899fc336542f1bf35862c85c2

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Finance

In Strategy and Management

Citations in the corpus

The effect of corporate tax avoidance on the cost of equity (2013, methodology): “Our main measure is based on Easton (2004), where the cost of equity capital (labeled R_PEG by Easton) is defined as:”
What Drives Stock Price Movements (2013, neutral): “, Lakonishok, Shleifer, and Vishny (1994), Fama and French (1995), and Cohen, Polk, and Vuolteenaho (2003)).”
Fair Value Accounting for Liabilities and Own Credit Risk (2008, methodology): “R2 0.02 ECC = the mean of the equity cost of capital estimates from the Gebhardt et al. (2001), Claus and Thomas (2001), Gode and Mohanram (2003), and Easton (2004) models.”
Cost of Capital and Earnings Transparency (2008, neutral): “Studies that adopt this approach, including Claus and Thomas (2001), Gebhardt et al. (2001), Gode and Mohanram (2003), and Easton (2004), develop somewhat different implied expected cost of capital measures.”
Corporate Governance and Regulation: Can There Be Too Much of a Good Thing? (2007, positive): “10 Following Easton (2004), the implied cost of capit l s estimated from the following modified price-earnings growth ratio: 2 1 1 2 / ) ˆ ˆ ˆ ( r x d r x P t t t t + + + − ⋅ + = , where t P is the market price of a company’s stock at date t, j t x + ˆ is the expected future earnings per share (EPS)”
Customer Concentration Risk and the Cost of Equity Capital (2016, methodology): “Cost of Equity OJN, Cost of Equity MPEG, Cost of Equity CT, and Cost of Equity GLS are the implied cost of equity estimates calculated following the methodologies outlined in Ohlson and Juettner-Nauroth (2005), Easton (2004), Claus and Thomas (2001), and Gebhardt et al. (2001), respectively.”
Disclosure Incentives and Effects on Cost of Capital around the World (2005, background): “Cost of equity the ex ante cost of equity capital using the price-earnings growth (PEG) ratio (Easton 2004); YR 1 if disclosure data is for 1993, 0 otherwise for 1991 data; LASSET natural log of total assets; ROA return on assets; LEV short- and long-term debt to total assets; VAR variability of ear”
Agency Costs of Free Cash Flow and the Effect of Shareholder Rights on the Implied Cost of Equity Capital (2010, neutral): “…that a more conservative accounting system implies that a smaller fraction of firm value is captured during the explicit forecast horizon, and therefore the abnormal earnings must exhibit a higher growth rate beyond the explicit forecast horizon to catch up with economic earnings (Easton (2004)).”