We use the residual-income valuation model to simultaneously estimate firm-specific implied long-term growth rate in abnormal earnings and cost of capital by relating earnings-to-price and book-to-market ratios in a linear fashion. This simple framework estimates investors' consensus beliefs...

This paper aims at providing an overview of the theoretical considerations and a review of the empirical literature on the relationship between finance and growth. Section I describes the role of financial development in economic growth at the macro level, both theoretically and empirically....

We introduce a straightforward method to estimate the implied cost of equity, allowing growth horizons to fluctuate both cross-sectionally and through time. Our results show substantial dispersion of implied growth horizons in cross-sections and time-series for US firms in the years 1988-2013....