Baker and Wurgler [2007] take a “top down” approach to behavioral finance and the stock market. Investor sentiment is taken to be exogenous and the focus is on its empirical effects. Sentiment is measurable and its waves have clearly discernible, important, and regular effects on firms and...

Given the sensitivity of stock valuation models to the discount rate k*, it follows that their operational usefulness is significantly dependent upon the accuracy of the estimate of k*. The purpose of this study is to illustrate the use of the geometric mean to estimate k*. The usual approach to...

The theoretical valuation model has been shown to be mathematically equivalent to a price-earnings approach to stock valuation. The theoretical model explicitly includes estimates of long-run dividend (or earnings) growth. Because the price-earnings ratio approach is equivalent, it also...

Baker and Wurgler [2007] take a “top down” approach to behavioral finance and stock market. Investor sentiment is taken to be exogenous and the focus is on its empirical effects. Sentiment is measurable and its waves have clearly discernable, important, and regular effects on firms and the...

The exhibits support several conclusions we can draw from use of the Williams and Brigham-Pappas dividend growth models. The particular model selected to describe a stock's dividend time path has a great impact on the stock's identified value. This may be seen in the large differences in stock...