Evolution of earnings-to-price ratios: International evidence
AbstractIn this paper, we examine the pattern of historical evolution of international earnings-to-price ratios for a sample of 17 developed markets over the period 1980-2008. Using a measure of distance between earnings-to-price ratios of international stock markets, we find that earnings-to-price ratios of 17 markets have significantly converged toward each other during the sample period. Specifically, the average distance for our sample markets has decreased by about 70% during this period. Our analysis indicates that the convergence in earnings-to-price ratios reflects increasing capital market integration rather than more alignment in industrial structure among these markets.
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Bibliographic InfoArticle provided by Elsevier in its journal Global Finance Journal.
Volume (Year): 21 (2010)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/inca/620162
Earnings-to-price ratio Convergence Capital market integration;
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