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| Author: | Edmunds, J. C. Moeller, S. E. |
| Title: | International equity returns, country growth, and world economic recovery. |
| Journal: | Management International Review
1988 : VOL. 28:1, p. 45-50 |
| Index terms: | WORLD ECONOMY EQUITY CAPITAL CAPITAL MARKETS ECONOMIC CONDITIONS |
| Language: | eng |
| Abstract: | Many companies in developing countries will experience growth rates of earnings and dividends greater than the required rate of return. A firm's growth rate depends on the retention rate of income and the return on equity, which in turn depends on the firms debt-to-equity ratio. Developing country firms can be excepted to show high growth rates because their retention rate is high and they use little funded debt. In addition, declining interest rates in the United States and lower oil prices will reduce the required rates of return for equity investors. Both of these factors will result in higher values for foreign securities. |
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