This journal recently published a debate between professors Gunther Friedl and Bernhard Schwetzler (hereafter “F&S”), on the one hand, and professors Michael Bradley and Gregg Jarrell (“B&J”), on the other hand. B&J initiated the first round of the debate by criticizing the constant...

We evaluate the well-known Fisher Equation in the context of accounting income with a focus on its implicit assumptions regarding capital maintenance. Our findings indicate that the Fisher Equation does not allow for a consistent conversion from nominal to real terms, given that it modifies the...

In recent issues of the Journal of Applied Corporate Finance Friedl and Schwetzler (2011) and Bradley and Jarrell (2008, 2011) voiced opposing views on the relation between the retention rate/plowback rate and the growth rate in the context of the constant growth valuation model when considering...

We formulate a generalised constant growth valuation model incorporating inflation and capital maintenance. We find that in general there are two sources of growth: growth due to capital maintenance and growth due to net new investments. The generalised version of the constant growth model...