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References (4)
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Christine Botosan, Marlene Plumlee (2005)
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Merton Miller, F. Modigliani (1961)
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Peter Easton, Gary Taylor, Pervin Shroff, Theodore Sougiannis (2002)
Using forecasts of earnings to simultaneously estimate growth and the rate of return on equity investmentJournal of Accounting Research, 40
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(1998)
“ A Comparison of Dividend , Cash Flow and Earnings Approaches to Valuation
- Publisher
- Wiley
- Copyright
- Copyright © 2016 Cantillon and Mann
- ISSN
- 1078-1196
- eISSN
- 1745-6622
- DOI
- 10.1111/jacf.12195
- Publisher site
- See Article on Publisher Site
Abstract
Earnings‐based valuation models, although long used by finance practitioners, have become increasingly popular among finance academics as well. Among the most important reasons for academics' increased acceptance of earnings‐based valuation is the well‐documented claim that earnings over a short (three‐ to four‐year) forecast horizon tend to capture a large fraction—as much as 80%—of today's value, much more than is captured by near‐term forecasts of free cash flow, the measure long advocated by finance theorists as the basis for DCF valuation.
Journal
Journal of Applied Corporate Finance – Wiley
Published: Sep 1, 2016