Working Paper Series, Department of Economics, Copenhagen Business School
A Price Earnings Index for the Danish Stock Market
Abstract: Price-earnings ratios are part of the toolkit that is used
for assessing the valuation of individual firms on the stock market as well
as the entire market itself. This paper presents consistent P/E series for
the liquid Danish shares adjusted for share buybacks. The results show that
over the period from 1969 to 2003, the average (trailing) P/E equals 13.5.
The P/E reaches its lowest level in 1980, which is likely to be due to a
soaring oil price, high wage increases and interest rates approaching 20
percent. Notwithstanding optimistic equity pricing also in Denmark in the
late 1990s, the upturn in Danish valuations was more moderate than in the
US. The correction that sets in subsequently reversed essentially the gains
in the Danish P/E in the 1990s.
Keywords: Price-earning; ratio; (follow links to similar papers)
JEL-Codes: H00; (follow links to similar papers)
28 pages, December 8, 2004
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