Center for Analytical Finance University of California , Santa Cruz Working Paper No . 34 A Dynamic Model of Firm Valuation

@inproceedings{Lazzati2016CenterFA,
  title={Center for Analytical Finance University of California , Santa Cruz Working Paper No . 34 A Dynamic Model of Firm Valuation},
  author={Natalia Lazzati and Amilcar A. Menichini},
  year={2016}
}
We propose a dynamic version of the dividend discount model, solve it in closed-form, and assess its empirical validity. The valuation method is tractable and can be easily implemented. We find that our model produces equity value forecasts that are, on average, very close to market prices, and explains a large proportion (around 83%) of the observed… CONTINUE READING