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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27479
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| Title: | P-E Multiples and Changing Interest Rates |
| Authors: | Gode, Dan
Ohlson, James |
| Issue Date: | 7-Jul-2000 |
| Series/Report no.: | Dhananjay (Dan) K. Gode-02 |
| Abstract: | How should one conceptualize price-earnings multiples (earnings
capitalization factors) when interest rates change stochastically? The
paper shows that while the multiplier for forthcoming earnings depends
on current rates, the multiplier for current earnings depends on lagged
rates. With these ideas in place, the paper generalizes Ohlson [1995]
model with particular emphasis on the case when earnings provide
sufficient accounting information for valuation. Results do not depend
on the stochastic behavior of interest rates. The paper further derives
the supporting modified information dynamic and shows how earnings
persistence depends on both the current and the lagged rate. |
| URI: | http://hdl.handle.net/2451/27479 |
| Appears in Collections: | Accounting Working Papers
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