Terminal valuations, growth rates and the implied cost of capital

This article is published with open access at Springerlink.comWe develop a model based on the notion that prices lead earnings, allowing for a simultaneous estimation of the implied growth rate and the cost of equity capital for US industrial sectors. The major difference between our approach and that in prior literature is that ours avoids the necessity to make assumptions about terminal values and consequently about future growth rates. In fact, growth rates are an endogenous variable, which is estimated simultaneously with the implied cost of equity capital. Since we require only 1-year-ahead forecasts of earnings and no assumptions about dividend payouts, our methodology allows us to estimate ex ante aggregate growth and risk premia over a larger sample of firms than has previously been possible. Our estimate of the risk premium being between 3.1 and 3.9 % is at the lower end of recent estimates, reflecting the inclusion of these short-lived companies. Our estimate of the long run growth is from 4.2 to 4.7 %

Potential role of endocrine gastrin in the colonic adenoma carcinoma sequence

The role of hyper-gastrinaemia in the incidence of colonic cancer remains to be clarified. The aim of this study was to determine whether cholecystokinin-2 (CCK-2) receptor expression predicts the sensitivity of human colonic adenomas to the proliferative effects of serum hyper-gastrinaemia. Gene expression of the classical (74 kDa) CCK-2 receptor in human colonic adenoma specimens and cell lines, was quantified by real-time PCR. Western blotting, using a CCK-2 receptor antiserum, confirmed protein expression. A transformed human colonic adenoma was grown in SCID mice, with hyper-gastrinaemia induced by protein pump inhibitors. CCK-2 receptor blockade was achieved by using neutralising antiserum. Both human colonic adenoma cell lines and biopsies expressed CCK-2 receptor mRNA at levels comparable with CCK-2 receptor transfected fibroblasts and oxyntic mucosa. Western blotting confirmed immunoreactive CCK-2 receptor bands localised to 45, 74 and 82.5 kDa. Omeprazole and lansoprazole-induced hyper-gastrinaemia (resulting in serum gastrin levels of 34.0 and 153.0 pM, respectively) significantly increased the weight of the human adenoma grafts (43% (P=0.016) and 70% (P=0.014), respectively). The effect of hypergastrinaemia on tumour growth was reversed by use of antiserum directed against the CCK-2 receptor. Hyper-gastrinaemia may promote proliferation of human colonic adenomas that express CCK-2 receptor isoforms