IDEAS home Printed from https://ideas.repec.org/p/een/camaaa/2008-32.html
   My bibliography  Save this paper

Earnings Valuation And Sources Of Growth

Author

Listed:
  • Sherrill Shaffer

Abstract

A structural discounted cash flow (DCF) model shows that the underlying sources of earnings growth generate very different growth paths and equity values than assumed in traditional DCF calculations. Moreover, the structural DCF model can assess the impact of exogenous factors on valuation, uncovering new costs of deflation or high inflation among other results. These findings have important implications for researchers, policy makers, and practitioners.

Suggested Citation

  • Sherrill Shaffer, 2008. "Earnings Valuation And Sources Of Growth," CAMA Working Papers 2008-32, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2008-32
    as

    Download full text from publisher

    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2021-06/32_shaffer_2008.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tasnadi, Attila, 2006. "Price vs. quantity in oligopoly games," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 541-554, May.
    2. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(1), pages 1-12.
    3. Thomas M. Humphrey, 2004. "Classical deflation theory," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 90(Win), pages 11-32.
    4. Andrew F. Daughety, 1985. "Reconsidering Cournot: The Cournot Equilibrium is Consistent," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 368-379, Autumn.
    5. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    6. Ingolf Dittmann & Ernst Maug & Johannes Kemper, 2004. "How Fundamental are Fundamental Values? Valuation Methods and their Impact on the Performance of German Venture Capitalists," European Financial Management, European Financial Management Association, vol. 10(4), pages 609-638, December.
    7. William Novshek, 1980. "Cournot Equilibrium with Free Entry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 473-486.
    8. Matsumoto, Akio & Nonaka, Yasuo, 2006. "Statistical dynamics in a chaotic Cournot model with complementary goods," Journal of Economic Behavior & Organization, Elsevier, vol. 61(4), pages 769-783, December.
    9. Williamson, Stephen D, 1987. "Transactions Costs, Inflation, and the Variety of Intermediation Services," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(4), pages 484-498, November.
    10. Marti G. Subrahmanyam & Stavros B. Thomadakis, 1980. "Systematic Risk and the Theory of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(3), pages 437-451.
    11. repec:bla:jfinan:v:59:y:2004:i:2:p:623-650 is not listed on IDEAS
    12. Bradford Cornell, 2001. "Is the Response of Analysts to Information Consistent with Fundamental Valuation? The Case of Intel," Financial Management, Financial Management Association, vol. 30(1), Spring.
    13. Moreno, Diego & Ubeda, Luis, 2006. "Capacity precommitment and price competition yield the Cournot outcome," Games and Economic Behavior, Elsevier, vol. 56(2), pages 323-332, August.
    14. James Claus & Jacob Thomas, 2001. "Equity Premia as Low as Three Percent? Evidence from Analysts' Earnings Forecasts for Domestic and International Stock Markets," Journal of Finance, American Finance Association, vol. 56(5), pages 1629-1666, October.
    15. Thomas I. Palley, 2008. "Keynesian Models of Deflation and Depression Revisited: Inside Debt and Price Flexibility," Working Papers wp169, Political Economy Research Institute, University of Massachusetts at Amherst.
    16. Mr. Taimur Baig, 2003. "Understanding the Costs of Deflation in the Japanese Context," IMF Working Papers 2003/215, International Monetary Fund.
    17. Leonard Cheng, 1985. "Comparing Bertrand and Cournot Equilibria: A Geometric Approach," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 146-152, Spring.
    18. Palley, Thomas I., 2008. "Keynesian models of deflation and depression revisited," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 167-177, October.
    19. Booth, Laurence, 1991. "The Influence of Production Technology on Risk and the Cost of Capital," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 26(1), pages 109-127, March.
    20. Marty, Alvin L & Chaloupka, Frank J, 1988. "Optimal Inflation Rates: A Generalization," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(1), pages 141-144, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fischer, Carolyn, 2011. "Market power and output-based refunding of environmental policy revenues," Resource and Energy Economics, Elsevier, vol. 33(1), pages 212-230, January.
    2. Shaffer, Sherrill, 2004. "Patterns of competition in banking," Journal of Economics and Business, Elsevier, vol. 56(4), pages 287-313.
    3. Haraguchi, Junichi & Matsumura, Toshihiro, 2014. "Price versus quantity in a mixed duopoly with foreign penetration," Research in Economics, Elsevier, vol. 68(4), pages 338-353.
    4. Lambertini, Luca, 1997. "Prisoners' Dilemma in Duopoly (Super)Games," Journal of Economic Theory, Elsevier, vol. 77(1), pages 181-191, November.
    5. Aymeric Lardon, 2019. "On the coalitional stability of monopoly power in differentiated Bertrand and Cournot oligopolies," Theory and Decision, Springer, vol. 87(4), pages 421-449, November.
    6. Basak, Debasmita & Wang, Leonard F.S., 2019. "Cournot vs. Bertrand in mixed markets with R&D," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 265-271.
    7. Rothschild, R., 1995. "Sustaining collusion when the choice of strategic variable is endogenous," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 373-385, December.
    8. Marc Escrihuela-Villar & Jorge Guillén, 2025. "On Cournot and Bertrand competition in collusive mixed oligopolies," Journal of Economics, Springer, vol. 144(3), pages 231-246, April.
    9. Jean J. Gabszewicz & Jacques-François Thisse, 2000. "Microeconomic theories of imperfect competition," Cahiers d'Économie Politique, Programme National Persée, vol. 37(1), pages 47-99.
    10. Rupayan Pal, "undated". "The Cournot-Bertrand profit differential: A Reversal result in network goods duopoly," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-014, Indira Gandhi Institute of Development Research, Mumbai, India.
    11. Troy Tassier, 2013. "Handbook of Research on Complexity, by J. Barkley Rosser, Jr. and Edward Elgar," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 39(1), pages 132-133.
    12. Luca Lambertini, 2000. "Technology and Cartel Stability under Vertical Differentiation," German Economic Review, Verein für Socialpolitik, vol. 1(4), pages 421-442, November.
    13. Chang Ray-Yun & Hu Jin-Li & Lin Yan-Shu, 2018. "The Choice of Prices versus Quantities under Outsourcing," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(2), pages 1-20, July.
    14. Rupayan Pal, 2014. "Price and quantity competition in network goods duopoly: a reversal result," Economics Bulletin, AccessEcon, vol. 34(2), pages 1019-1027.
    15. Kangsik Choi & Seonyoung Lim, 2023. "Input Price Discrimination in Endogenous Competition Mode," The Japanese Economic Review, Springer, vol. 74(2), pages 301-330, April.
    16. Ibrahim Abada & Andreas Ehrenmann, 2016. "The prisoner’s dilemma in Cournot models: when endogenizing the level of competition leads to competitive behaviors," Cambridge Working Papers in Economics 1641, Faculty of Economics, University of Cambridge.
    17. Satoh, Atsuhiro & Tanaka, Yasuhito, 2015. "Relative profit maximization and the choice of strategic variables in duopoly," MPRA Paper 63000, University Library of Munich, Germany.
    18. Antonio Doria, Francisco, 2011. "J.B. Rosser Jr. , Handbook of Research on Complexity, Edward Elgar, Cheltenham, UK--Northampton, MA, USA (2009) 436 + viii pp., index, ISBN 978 1 84542 089 5 (cased)," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 196-204, April.
    19. Christian Schultz, 2002. "Transparency and Tacit Collusion in a Differentiated Market," CESifo Working Paper Series 730, CESifo.

    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2008-32. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cama Admin (email available below). General contact details of provider: https://edirc.repec.org/data/asanuau.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.