Market Valuations in the New Economy: An Investigation of What Has Changed

Posted: 4 Mar 2003

See all articles by John E. Core

John E. Core

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Wayne R. Guay

University of Pennsylvania - Accounting Department

Andrew Van Buskirk

Ohio State University (OSU) - Department of Accounting & Management Information Systems

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Abstract

We find mixed support for the hypothesis that a "New Economy" subperiod occurred in the late 1990s in which the relation between equity value and traditional financial variables differs from previous periods. We examine a regression model of equity value on financial variables over 25 years for a broad firm sample and for firm subsamples thought to be emblematic of the New Economy. We find the regression model's explanatory power declined in the New Economy subperiod for all firm subsamples. However, for all subsamples, the regression model's structure during the New Economy subperiod is not unusual compared to other subperiods.

Keywords: capital markets, equity valuation, New Economy

JEL Classification: G12, M41

Suggested Citation

Core, John E. and Guay, Wayne R. and Van Buskirk, Andrew, Market Valuations in the New Economy: An Investigation of What Has Changed. Journal of Accounting & Economics, Vol. 34, No. 1-3, pp. 43-67, January 2003. Available at SSRN: https://ssrn.com/abstract=359460

John E. Core

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02138
United States

Wayne R. Guay (Contact Author)

University of Pennsylvania - Accounting Department ( email )

3641 Locust Walk
1329 Steinberg-Dietrich Hall
Philadelphia, PA 19104-6365
United States
215-898-7775 (Phone)
215-573-2054 (Fax)

Andrew Van Buskirk

Ohio State University (OSU) - Department of Accounting & Management Information Systems ( email )

2100 Neil Avenue
Columbus, OH 43210
United States

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