Most of high-tech firms grow at very high rates and are expected to grow at those rates for an initial period. These rates are expected to decline as the firm grows in size and loses its competitive advantage. Of the models provided, the three-stage DDM is most appropriate to analyze high-tech firms because of its flexibility. H-model may not be appropriate, because a linear decline from the high growth rate to the constant growth rate cannot be assumed and the dividend payout ratio is fixed. |
