TY  - JOUR
AU  - Chan,Louis K.C.
AU  - Karceski,Jason
AU  - Lakonishok,Josef
TI  - The Level and Persistence of Growth Rates
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8282
PY  - 2001
Y2  - May 2001
UR  - http://www.nber.org/papers/w8282
L1  - http://www.nber.org/papers/w8282.pdf
N1  - Author contact info:
Louis Chan
Department of Finance
University of Illinois
113 Commerce West, MC 706
1206 S. Sixth
Champaign, IL 61820
Tel: 217/333-6391
E-Mail: l-chan2@uiuc.edu

Jason Karceski
University of Florida
P.O. Box 117168
Gainesville, Florida 32653
Tel: 352/846-1059
Fax: 352/392-0301
E-Mail: no email available

Josef Lakonishok
University of Illinois, Department of Finance
College of Commerce & Business Administration
1206 S. Sixth Street
Champaign, IL 61820
Tel: 217/333-7185
Fax: 217/244-1151
E-Mail: jlakonishok@yahoo.com
AB  - Expected long-term earnings growth rates are crucial inputs to valuation models and for cost of capital estimates. We analyze historical long-term growth rates across a broad cross-section of stocks using several operating performance indicators. We test whether growth persists, and whether it is forecastable. Cases of very high growth have occurred, but are relatively rare. There is scant persistence in growth beyond chance, and limited ability to identify firms with high future long-term growth. IBES forecasts are too optimistic, and have low predictive power for long-term growth. Regressions using a variety of predictors confirm the low predictability in growth. Valuations that assume persistently high growth over prolonged periods rest on shaky foundations.
ER  -