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Journal of Economics, Finance and Administrative Science
Print version ISSN 2077-1886
Abstract
PEREDA, Javier. Price - earnings ratio for the Lima stock exchange: issues and Applications. Journal of Economics, Finance and Administrative Science [online]. 2012, vol.17, n.32, pp.41-52. ISSN 2077-1886.
In this paper we construct a methodology to calculate the price-earnings ratio (PER) of the General Index of the Lima Stock Exchange (IGBVL) for the period 1995-2011 following Shiller (2005). Results show that equity prices, in the analyzed period, basically responded to the expected evolution of earnings of the companies, even during the period of the equity prices boom that preceded the financial crisis of 2008. This conclusion is reinforced when we calculate, following Hayford y Malliaris (2004), the implicit equity premia expected for stock investors. We find high values of equity premia during the period of stock prices boom, which would justify the high PER values registered in that period.
Keywords : PER; price-earnings ratio; asset prices; equity premia.