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dc.contributor.authorSchröder, Daviden_US
dc.date.accessioned2009-01-29T15:11:01Z-
dc.date.available2009-01-29T15:11:01Z-
dc.date.issued2005en_US
dc.identifier.urihttp://hdl.handle.net/10419/22919-
dc.description.abstractA new approach of estimating a forward-looking equity risk premium (ERP) is to calculate the implied risk premium using present value (PV) formulas. This paper compares implied risk premia obtained from different PV models and evaluates them by analyzing their underlying firmspecific cost-of-capital estimates. It is shown that specific versions of dividend discount models (DDM) and residual income models (RIM) lead to similar ERP estimates. However, the results of cross-sectional regression tests of individual firm risk suggest that there are qualitative differences between both approaches. Expected firm risk obtained from the DDM is more in line with standard asset pricing models and performs better in predicting future stock returns than estimates from the RIM.en_US
dc.language.isoengen_US
dc.publisheren_US
dc.relation.ispartofseriesBonn econ discussion papers 2005,13en_US
dc.subject.jelG12en_US
dc.subject.ddc330en_US
dc.subject.keywordequity risk premiumen_US
dc.subject.keywordcost of capitalen_US
dc.subject.keywordexpected stock returnsen_US
dc.titleThe Implied Equity Risk Premium: An Evaluation of Empirical Methodsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn490547591en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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