Based on dividend capitalization, Holt presents a model for determining the appropriate relative PE
ratio for a growth stock as compared to other stocks, whereas Malkiel presents an independent approach for valuing a growth stock relative to a non-growth stock.
We also included company size, the time and absolute PE interaction, and the time and relative PE interaction as control variables.
2ij] = the relative PE of accountant i in time block j (See Lazear 1999) (-2 [less than or equal to] [Z.
5ij] = the interaction of time to promotion and relative PE, computed like [Z.
We used the relative PE measures at the staff and senior rank (i.
In our archival data, a larger increase in promotion probabilities for absolute PEs, and a smaller increase in promotion probabilities with relative PEs, will provide evidence that is consistent with a work-life based promotion process.
The higher predictive power of relative PEs is consistent with the existence of a relative promotion process to senior and is inconsistent with an absolute promotion to senior process.