What Determines Price-Earnings Ratios
CFA Institute
What Determines Price-Earnings Ratios? Author(s): William Beaver and Dale Morse Source: Financial Analysts Journal, Vol. 34, No. 4 (Jul. - Aug., 1978), pp. 65-76 Published by: CFA Institute Stable URL: http://www.jstor.org/stable/4478160 Accessed: 12/06/2010 17:20
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by WilliamBeaverand Dale Morse
What Price
>
Determines -EarningsRatios? proach,we examinethe behavior P/E ratiosand of explore the ability of earningsgrowth (hereafter growth)and risk to explain P/E ratio differences acrossstocks.We find that,although differences in P/E ratiospersist up to 14 years,growth risk for and In appear explainlittleof this persistency. particto ular, growth appearsto have virtuallyno effect beyondtwo years.>
Valuation Theory
What Determines Price-Earnings Ratios? Author(s): William Beaver and Dale Morse Source: Financial Analysts Journal, Vol. 34, No. 4 (Jul. - Aug., 1978), pp. 65-76 Published by: CFA Institute Stable URL: http://www.jstor.org/stable/4478160 Accessed: 12/06/2010 17:20
Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=cfa. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
CFA Institute is collaborating with JSTOR to digitize, preserve and extend access to Financial Analysts Journal.
http://www.jstor.org
by WilliamBeaverand Dale Morse
What Price
>
Determines -EarningsRatios? proach,we examinethe behavior P/E ratiosand of explore the ability of earningsgrowth (hereafter growth)and risk to explain P/E ratio differences acrossstocks.We find that,although differences in P/E ratiospersist up to 14 years,growth risk for and In appear explainlittleof this persistency. particto ular, growth appearsto have virtuallyno effect beyondtwo years.>
Valuation Theory