Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 156

Using Accounting Earnings to Estimate Beta

Year S&P 500 Bookscape Year S&P 500 Bookscape

1980 3.01% 3.55% 1991 -12.08% -32.00%

1981 1.31% 4.05% 1992 -5.12% 55.00%

1982 -8.95% -14.33% 1993 9.37% 31.00%

(^1983) -3.84% 47.55% (^1994) 36.45% 21.06%
1984 26.69% 65.00% 1995 30.70% 11.55%
1985 -6.91% 5.05% 1996 1.20% 19.88%
(^1986) -7.93% 8.50% (^1997) 10.57% 16.55%
1987 11.10% 37.00% 1998 -3.35% 7.10%
1988 42.02% 45.17% 1999 18.13% 14.40%
(^1989) 5.52% 3.50% (^2000) 15.13% 10.50%
1990 -9.58% -10.50% 2001 -14.94% -8.15%
2002 6.81% 4.05%

Accounting betas are computed by regressing accounting earnings changes

against changes in earnings at the S&P 500.