Fundamental Factors Influencing Price Earnings Relationships A Cross Sectional Study (Classic Reprint)
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Opis: Fundamental Factors Influencing Price Earnings Relationships - Krishnamurthi Sudhir

Excerpt from Fundamental Factors Influencing Price Earnings Relationships: A Cross Sectional Study
Factors such as size, growth, the explanatory power of the dividend-earnings regression are also important in explaining the relationship. And finally, we find that the industry factor is important in explaining the variability of the slope coefficient and its significance in the price earnings relationship.
With the analysis in this paper we shed new light into phenomena observed by other researchers. For example, we reconfirm that the slope of the price earnings regression, which is similar to the P/E ratio, is higher for larger firms (Basu [1978]). This result has usually been attributed to the better quality of earnings for larger firms. Our investigation reveals that this slope is larger for firms which have a higher dividend payout ratio. Further, we observe that large firms have a higher dividend payout ratio, which fully accounts for their higher price earnings slope. We can explain this result by assuming that managements of large firms pay out a higher fraction of their earnings as dividends because of the intrinsic quality of their earnings. In other words, the dividend payout ratio perhaps, on average, proxies for the quality of earnings for different firms.
The next section introduces the simple model that we use to relate earnings and prices. Section 3 discusses the firm specific factors that are used to explain the earnings price relationship. Section 4 describes the sample, the estimated data, and the main empirical results. Section 5 identifies the industry effects that alter earnings price relationships. Section 6 discusses the implications of the results and concludes the study.
2. Price Earnings Relationships
Accounting researchers have shown that the forecast errors in earnings are related to abnormal security returns. The question then arises whether this earning-price relationship differs across firms
About the Publisher
Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com
This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.


Szczegóły: Fundamental Factors Influencing Price Earnings Relationships - Krishnamurthi Sudhir

Tytuł: Fundamental Factors Influencing Price Earnings Relationships
Podtytuł: A Cross Sectional Study (Classic Reprint)
Autor: Krishnamurthi Sudhir
Wydawnictwo: FB &c Ltd
ISBN: 9781330741627
Języki: angielski
Rok wydania: 2015
Ilość stron: 76
Format: 15.2x22.9cm
Oprawa: Miękka


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Fundamental Factors Influencing Price Earnings Relationships
A Cross Sectional Study (Classic Reprint)

Excerpt from Fundamental Factors Influencing Price Earnings Relationships: A Cross Sectional Study
Factors such as size, growth, the explanatory power of the dividend-earnings regression are also important in explaining the relationship. And finally, we find that the industry factor is important in explaining the variability of the slope coefficient and its significance in the price earnings relationship.
With the analysis in this paper we shed new light into phenomena observed by other researchers. For example, we reconfirm that the slope of the price earnings regression, which is similar to the P/E ratio, is higher for larger firms (Basu [1978]). This result has usually been attributed to the better quality of earnings for larger firms. Our investigation reveals that this slope is larger for firms which have a higher dividend payout ratio. Further, we observe that large firms have a higher dividend payout ratio, which fully accounts for their higher price earnings slope. We can explain this result by assuming that managements of large firms pay out a higher fraction of their earnings as dividends because of the intrinsic quality of their earnings. In other words, the dividend payout ratio perhaps, on average, proxies for the quality of earnings for different firms.
The next section introduces the simple model that we use to relate earnings and prices. Section 3 discusses the firm specific factors that are used to explain the earnings price relationship. Section 4 describes the sample, the estimated data, and the main empirical results. Section 5 identifies the industry effects that alter earnings price relationships. Section 6 discusses the implications of the results and concludes the study.
2. Price Earnings Relationships
Accounting researchers have shown that the forecast errors in earnings are related to abnormal security returns. The question then arises whether this earning-price relationship differs across firms
About the Publisher
Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com
This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

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Szczegóły: Fundamental Factors Influencing Price Earnings Relationships - Krishnamurthi Sudhir

Tytuł: Fundamental Factors Influencing Price Earnings Relationships
Podtytuł: A Cross Sectional Study (Classic Reprint)
Autor: Krishnamurthi Sudhir
Wydawnictwo: FB &c Ltd
ISBN: 9781330741627
Języki: angielski
Rok wydania: 2015
Ilość stron: 76
Format: 15.2x22.9cm
Oprawa: Miękka


Recenzje: Fundamental Factors Influencing Price Earnings Relationships - Krishnamurthi Sudhir

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