EconPapers    
Economics at your fingertips  
 

The Level and Persistence of Growth Rates

Louis K. C. Chan, Jason Karceski and Josef Lakonishok
Additional contact information
Louis K. C. Chan: Department of Finance, College of Commerce and Business Administration, University of Illinois at Urbana-Champaign;
Jason Karceski: Department of Finance, Warrington College of Business Administration, University of Florida;
Josef Lakonishok: Department of Finance, College of Commerce and Business Administration, University of Illinois at Urbana-Champaign, and NBER.

Journal of Finance, 2003, vol. 58, issue 2, 643-684

Abstract: Expectations about long-term earnings growth are crucial to valuation models and cost of capital estimates. We analyze historical long-term growth rates across a broad cross section of stocks using several indicators of operating performance. We test for persistence and predictability in growth. While some firms have grown at high rates historically, they are relatively rare instances. There is no persistence in long-term earnings growth beyond chance, and there is low predictability even with a wide variety of predictor variables. Specifically, IBES growth forecasts are overly optimistic and add little predictive power. Valuation ratios also have limited ability to predict future growth. Copyright 2003 by the American Finance Association.

Date: 2003
References: Add references at CitEc
Citations View citations in EconPapers (66) Track citations by RSS feed

Downloads: (external link)
http://www.blackwell-synergy.com/servlet/useragent ... &year=2003&part=null link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:58:y:2003:i:2:p:643-684

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2018-08-15
Handle: RePEc:bla:jfinan:v:58:y:2003:i:2:p:643-684