Research

P/E Movements: Some New Results

The P/E ratio is often used as a metric to compare individual stocks and the market as whole relative to historical valuations. We examine the factors that affect changes in the inverse of the P/E ratio (E/P) over time in the broad market (S&P500 Index). We use a limited number of variables that can be justified on theoretical grounds, and include variables that measure investor beliefs and changes in tax rates. We show that tax rates and investor optimism are important factors that affect the P/E ratio.

Publication Information
Article Title: P/E Movements: Some New Results
Journal: Social Science Research Network (Jan, 2004)
Author(s): Dudney, Donna;  Jirasakuldech, Benjamas;  Zorn, Thomas S
Researcher Information
    
Dudney, Donna
Dudney, Donna
Associate Dean of Undergraduate Curriculum and Programs
Expertise:
  • Financial Institutions
  • Financial Markets & Investing
  • Managerial Economics
Finance
CoB 301 G
P.O. Box 880490
University of Nebraska-Lincoln
Lincoln, NE 68588-0490, USA
Phone: (402) 472-5695
Fax: (402) 472-5180
ddudney@unl.edu
Zorn, Thomas S
Zorn, Thomas S
Emeritus
Expertise:
  • Corporate Finance
  • Financial Markets & Investing
  • Real Estate
  • Managerial Economics
  • Interest Rates & Risk Management
Finance
CoB 423
P.O. Box 880490
University of Nebraska-Lincoln
Lincoln, NE 68588-0490, USA
Phone: (402) 472-2330
Fax:
tzorn1@unl.edu