![Fundamental determinants of the Australian price-earnings multiple [An article from: Pacific-Basin Finance Journal]](https://www.ebooknetworking.net/books/noimage.jpg)
Fundamental determinants of the Australian price-earnings multiple [An article from: Pacific-Basin Finance Journal]
Book Details
Author(s)A.F.M. Shamsuddin, J.R. Hillier
PublisherElsevier
ISBN / ASINB000RQZVGK
ISBN-13978B000RQZVG2
AvailabilityAvailable for download now
MarketplaceUnited States 🇺🇸
Description
This digital document is a journal article from Pacific-Basin Finance Journal, published by Elsevier in 2004. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description:
This paper is the first attempt to investigate the factors fundamental to the setting of the price-earnings (P-E) multiple for the Australian stock market. The quarterly P-E ratio for the ASX 200 index is used as a measure of the market wide P-E multiple. It is demonstrated that a large portion of the variation in the P-E multiple can be explained by the dividend payout ratio, interest rates and GDP growth rates. In addition, consumers' confidence-a leading indicator of future growth opportunities, the Australian-US exchange rate-a key determinant of the competitiveness of domestic companies, and volatility of domestic market returns-a risk factor, have incremental explanatory power. The results are compatible with market rationality and they suggest that unlike the US, the actual time path of the Australian P-E multiple is primarily driven by the indicated fundamentals.
Description:
This paper is the first attempt to investigate the factors fundamental to the setting of the price-earnings (P-E) multiple for the Australian stock market. The quarterly P-E ratio for the ASX 200 index is used as a measure of the market wide P-E multiple. It is demonstrated that a large portion of the variation in the P-E multiple can be explained by the dividend payout ratio, interest rates and GDP growth rates. In addition, consumers' confidence-a leading indicator of future growth opportunities, the Australian-US exchange rate-a key determinant of the competitiveness of domestic companies, and volatility of domestic market returns-a risk factor, have incremental explanatory power. The results are compatible with market rationality and they suggest that unlike the US, the actual time path of the Australian P-E multiple is primarily driven by the indicated fundamentals.
