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Valuation and Long-Term Growth Expectations

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  • Tengulov, Angel
  • Zechner, Josef
  • Zwiebel, Jeffrey

Abstract

Long-term growth expectations are central to investment analysis and corporate valuation. Despite a dominant effect on firm value, the academic literature and practitioner conventions provide little guidance on determining this long-term growth rate. This article takes a step in addressing this gap: we estimate the relationship between long-term growth and an extensive selection of firm, industry, and market characteristics. Market prices do not seem to fully capture long-term growth information. Cross sectional tests yield substantial positive abnormal returns for firms with high expected long-term growth.

Suggested Citation

  • Tengulov, Angel & Zechner, Josef & Zwiebel, Jeffrey, 2025. "Valuation and Long-Term Growth Expectations," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 60(5), pages 2121-2158, August.
    • Handle: RePEc:cup:jfinqa:v:60:y:2025:i:5:p:2121-2158_2
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