Does firm value move too much to be justified by subsequent changes in cash flow?

Arbeitspapier

Movements in the value of corporate assets are justified by changes in expected future cash flow. The appropriate measure of cash flow for valuing assets is net payout, which is the sum of dividends, interest, and net repurchases of equity and debt. When discount rates are low and equity issuance is high, expected cash-flow growth is low because firms repurchase debt to offset equity issuance. A variance decomposition of the ratio of net payout reveals little transitory variation in discount rates that is not offset by common variation with expected cashflow growth.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Papers ; No. 05-18

Classification and Topics

• Classification: Wirtschaft ; Asset Pricing; Trading Volume; Bond Interest Rates ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Payout Policy
• Subject: asset valuation ; excess volatility ; payout policy ; Unternehmenswert ; Ertragswert ; Cash Flow ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Larrain, Borja ; Yogo, Motohiro
• Event: Veröffentlichung
• (who): Federal Reserve Bank of Boston
• (where): Boston, MA
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/55622
• Last update: 10.03.2025, 11:43 AM CET