Advanced Search
MyIDEAS: Login

Stock market valuation indicators: is this time different?

Contents:

Author Info

  • Jean Helwege
  • David Laster
  • Kevin Cole
Registered author(s):

    Abstract

    Record low dividend yields and record high market-to-book ratios in recent months have led many market watchers to conclude that these indicators now behave differently from how they have in the past. This paper examines the relationship between traditional market indicators and stock performance, and then addresses two popular claims that the meaning of these indicators has changed in recent years. The first is that dividend yields are permanently lower now than in the past because firms have increased their use of share repurchases as a tax-advantaged substitute for dividends. The second claim is that the implementation of Financial Accounting Standard (FAS) 106 for retiree health liabilities has seriously depressed the reported book values of many companies since the early 1990s, artificially raising their market-to-book ratios. We conclude that, even after adjusting for these factors, the current level of market indicators is a cause for concern.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.newyorkfed.org/research/staff_reports/research_papers/9520.html
    Download Restriction: no

    File URL: http://www.newyorkfed.org/research/staff_reports/research_papers/9520.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Federal Reserve Bank of New York in its series Research Paper with number 9520.

    as in new window
    Length:
    Date of creation: 1995
    Date of revision:
    Handle: RePEc:fip:fednrp:9520

    Contact details of provider:
    Postal: 33 Liberty Street, New York, NY 10045-0001
    Email:
    Web page: http://www.newyorkfed.org/
    More information through EDIRC

    Order Information:
    Email:

    Related research

    Keywords: Cafeteria benefit plans ; Forecasting ; Stock market;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Stock market valuation indicators: is this time different?
      by Miguel in Simoleon Sense on 2010-09-04 16:21:31
    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. John B. Carlson & Eduard A. Pelz & Mark Wohar, 2001. "Will the valuation ratios revert to their historical means? Some evidence from breakpoint tests," Working Paper 0113, Federal Reserve Bank of Cleveland.
    2. DeAngelo, Harry & DeAngelo, Linda & Skinner, Douglas J., 2000. "Special dividends and the evolution of dividend signaling," Journal of Financial Economics, Elsevier, vol. 57(3), pages 309-354, September.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:fip:fednrp:9520. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Farber).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.