Download or read book An Empirical Investigation of the Traditional and the Clean Surplus Valuation Models written by Stella N. Spilioti and published by . This book was released on 2002 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Early theoretical work on equity valuation suggests that equity prices are determined by variables such as dividends and growth in dividends. However, these 'traditional' views have been challenged by recent studies that seem to indicate that equity prices are determined by book value and discounted future abnormal earnings. This paper employs panel data methodology and equity prices from Athens Stock Exchange empirically to compare the performance of the traditional and the more recent models of equity valuation. The results show that the performance of the Ohlosn (1995) model is quite similar to that of the traditional models even though in some cases Ohlson's model performance appears to be superior.

Download or read book A Comparison of the Clean Surplus And Prospect Theory Valuation Models written by Zane L. Swanson and published by . This book was released on 2018 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the explanatory power of the clean surplus versus prospect theory valuation models. Literature argues that prospect theory and traditional capital market approaches are consistent from a theoretical perspective (Levy, De Giorgi and Hens 2012) . A comprehensive empirical analysis investigates the model valuations by examining: the pre/post 2008 crash, growth options, and size/risk attributes. In the process, the study does contribute knowledge about firm behavior pre and post the 2008 crash. As mentioned above, the study investigates the alternative firm models in a theoretical framework that incorporates growth options and assets-in-place. In so doing, the analyses find that growth options (e.g. research and development (R&D), and capital expenditures) model formulations have incremental explanatory power over the null hypothesis of not including a growth option. Thus, the study explores the decision-usefulness of the model alternatives to the extent that they impact upon firm increasing/decreasing returns to scale according to the log of R&D and capital expenditures. As part of the analysis, this study reports an interaction effect of R&D and capital expenditures. In summary, both clean surplus and prospect theory models capture value in all of these empirical dimensions. The clean surplus model appears to be a better predictor of firm value than prospect theory. To the authors' knowledge, this the first empirical study to compare comprehensively the clean surplus formulation versus an alternative prospect theory approach, in particular, before and after the 2008 financial crisis.

Download or read book Empirical Tests of the Clean Surplus Valuation Model Canadian Evidence written by and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Valuation Approaches and Metrics written by Aswath Damodaran and published by Now Publishers Inc. This book was released on 2005 with total page 102 pages. Available in PDF, EPUB and Kindle. Book excerpt: Valuation lies at the heart of much of what we do in finance, whether it is the study of market efficiency and questions about corporate governance or the comparison of different investment decision rules in capital budgeting. In this paper, we consider the theory and evidence on valuation approaches. We begin by surveying the literature on discounted cash flow valuation models, ranging from the first mentions of the dividend discount model to value stocks to the use of excess return models in more recent years. In the second part of the paper, we examine relative valuation models and, in particular, the use of multiples and comparables in valuation and evaluate whether relative valuation models yield more or less precise estimates of value than discounted cash flow models. In the final part of the paper, we set the stage for further research in valuation by noting the estimation challenges we face as companies globalize and become exposed to risk in multiple countries.

Download or read book Applications of Operational Research and Mathematical Models in Management written by Miltiadis Chalikias and published by MDPI. This book was released on 2020-11-17 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book, Applications of Operational Research and Mathematical Models in Management, includes all the papers published in the Mathematics Special Issue with the same title. All the published papers are of high quality and were subjected to rigorous peer review. Mathematics is included in the Science Citation Index (Web of Science), and its current Impact Factor is 1.747. The papers in this book deal with on R&D performance models, methods for ranking the perspectives and indicators of a balance scorecard, robust optimization model applications, integrated production and distribution problem solving, demand functions, supply chain games, probabilistic optimization and profit research, coordinated techniques for order preference, robustness approaches in bank capital optimization, and hybrid methods for tourism demand forecasting. All the papers included contribute to the development of research.

Download or read book An empirical investigation of asset valuation methods and their impact on equity investors decisions written by Kenneth R. Austin and published by . This book was released on 1986 with total page 220 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Valuation and Clean Surplus Accounting written by Colin D. B. Clubb and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides an analysis of the implications of the Feltham and Ohlson (1995) model for the relationship between unexpected security returns and unexpected earnings and cash flows. A simplified version of the Feltham and Ohlson linear information model is utilized to provide an intuitive explanation of the coefficients in the unexpected returns equation and to show that incremental information content for unexpected free cash flow beyond accounting earnings in the model depends on the existence of positive net present value (NPV) investment opportunities. The paper concludes by arguing that the model provides useful insights into factors that may influence the empirical relationship between security returns and accounting data.

Download or read book Extended Dividend Cash Flow and Residual Income Valuation Models written by and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Standard equity valuation approaches (i.e., DDM, RIM, and DCF model) are derived under the assumption of ideal conditions, such as infinite payoffs and clean surplus accounting. Because these conditions are hardly ever met, we extend the standard approaches, based on the fundamental principle of financial statement articulation. The extended models are then tested empirically by employing two sets of forecasts: (1) analyst forecasts provided by Value Line and (2) forecasts generated by cross-sectional regression models. The main result is that our extended models yield considerably smaller valuation errors. Moreover, by construction, identical value estimates are obtained across the extended models. By reestablishing empirical equivalence under non-ideal conditions, our approach provides a benchmark that enables us to quantify the errors resulting from individual deviations from ideal conditions, and thus, to analyze the robustness of the standard approaches. Finally, by providing a level playing field for the different valuation approaches, our findings have implications for other empirical settings, for example, estimating the implied cost of capital. -- Dirty Surplus ; Terminal Value ; Steady-State ; Valuation Error

Download or read book Clean Surplus Residual Income and Earnings Based Valuation Models written by John O'Hanlon and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Motivated by the fact that residual income based models of the link between the value of equity capital and the outputs of accrual accounting recently appearing in the literature have been based on particular assumed classes of residual income time series process, this paper presents a general residual income based expression for the value of equity capital which allows for clean surplus residual income to be generated by any class of ARIMA time series process. It shows that other models appearing in the literature are re-arrangements of special cases of this general expression. Further, motivated by the possibility that unscaled residual income data might plausibly exhibit explosive characteristics which would make it inappropriate to attempt to fit ARIMA models, a general expression for the value of equity is presented in terms of residual income scaled by book value. Re-arrangements of a number of simple special cases of this expression are explored. It is shown that, depending upon the time series properties of the scaled residual income measure, various combinations of the mean Accounting Rate of Return, the current level of Accounting Rate of Return, the current first difference of Accounting Rate of Return and a lagged Market to Book term can appear in accounting based models of the value of equity.

Download or read book The Routledge Companion to Fair Value and Financial Reporting written by Peter Walton and published by Routledge. This book was released on 2012-08-21 with total page 418 pages. Available in PDF, EPUB and Kindle. Book excerpt: Comprising contributions from a unique mixture of academics, standard setters and practitioners, and edited by an internationally recognized expert, this book, on a controversial and intensely debated topic, is the only definitive reference source available on the topics of fair value and financial reporting. Drawing chapters from a diverse range of contributors on different aspects of the subject together into one volume, it: examines the use of fair value in international financial reporting standards and the US standard SFAS 157 Fair Value Measurement, setting out the case for and against looks at fair value from a number of different theoretical perspectives, including possible future uses, alternative measurement paradigms and how it compares with other valuation models explores fair value accounting in practice, including audit, financial instruments, impairments, an investment banking perspective, approaches to fair value in Japan and the USA, and Enron’s use of fair value An outstanding resource, this volume is an indispensable reference that is deserving of a place on the bookshelves of both libraries and all those working in, studying, or researching the areas of international accounting, financial accounting and reporting.

Download or read book Clean Surplus written by Richard P. Brief and published by Routledge. This book was released on 2013-09-13 with total page 324 pages. Available in PDF, EPUB and Kindle. Book excerpt: First published in 1996. The relationship between the present discounted value of future cash flows and discounted excess earnings should be viewed as a mathematical property of a double-entry book[1]keeping system based on clean surplus. The purpose of this anthology is to facilitate future research by highlighting these historical developments and by showing how more recent theoretical and empirical research fits into the earlier history. The book is divided into four sections: historical overview; analytical properties of clean surplus; the theory of the clean surplus equation; and empirical implications.

Download or read book An Empirical Assessment of the Residual Income Valuation Model written by Patricia M. Dechow and published by . This book was released on 1997 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides an empirical assessment of the residual income valuation model presented in Ohlson (1995). We demonstrate that existing empirical research using Ohlson2s model is remarkably similar to past empirical workbased on the standard version of the dividend discounting model. We establish that the key unexploited empirical implications of Ohlson2s model derive from its assumption concerning the time-series properties of residual income. We show that this assumption is more empirically descriptive than the assumptions embedded in popular accounting-based valuation models. We find that a simple empirical version of the residual income valuation model provides modest improvements over the popular models in predicting and explaining future (abnormal) earnings, current stock prices and current stock returns. We also show that the residual income valuation model is the best predictor of future stock returns, and that this result is, at least in part, due to its ability to identify systematic errors inanalysts2 earnings forecasts.

Download or read book Examination of the Clean Surplus Assumption and Equity Valuation Models in Three Asian Pacific Markets written by Meihua Koo and published by . This book was released on 2001 with total page 122 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Oxford Handbook of Strategy written by David O. Faulkner and published by Oxford University Press. This book was released on 2006-04-06 with total page 1062 pages. Available in PDF, EPUB and Kindle. Book excerpt: Presents an analysis of how thinking on strategy has evolved and what are the likely developments. This work includes chapters on six key areas: Approaches to Strategy, Strategic Analysis and Formulation, Corporate Strategy; International Strategy; Strategies of Organizational Change; and Strategic Flexibility and Uncertainty.

Download or read book The Oxford Handbook of Strategy written by David Faulkner and published by Oxford University Press. This book was released on 2003-02-13 with total page 548 pages. Available in PDF, EPUB and Kindle. Book excerpt: This two-volume handbook presents an authoritative and up-to-date analysis of how thinking on strategy has evolved and what are the likely developments in the near future. All the contributors are experts in their area, and bring to the topic an understanding informed by many years' experience of research, teaching, and practice. Volume One focuses on two major areas: first, the various different approaches to strategy, and secondly, the development of competitive or business unit strategy, where the pursuit of sustainable competitive advantage is the key objective.

Download or read book Equity Valuation written by Peter O. Christensen and published by Now Publishers Inc. This book was released on 2009 with total page 127 pages. Available in PDF, EPUB and Kindle. Book excerpt: We review and critically examine the standard approach to equity valuation using a constant risk-adjusted cost of capital, and we develop a new valuation approach discounting risk-adjusted fundamentals, such as expected free cash flows and residual operating income, using nominal zero-coupon interest rates. We show that standard estimates of the cost of capital, based on historical stock returns, are likely to be a significantly biased measure of the firm's cost of capital, but also that the bias is almost impossible to quantify empirically. The new approach recognizes that, in practice, interest rates, expected equity returns, and inflation rates are all stochastic. We explicitly characterize the risk-adjustments to the fundamentals in an equilibrium setting. We show how the term structure of risk-adjustments depends on both the time-series properties of the free cash flows and the accounting policy. Growth, persistence, and mean reversion of residual operating income created by competition in the product markets or by the accounting policy are key determinants of the term structure of risk-adjustments.

Download or read book Equity Markets Valuation and Analysis written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2020-08-20 with total page 448 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sharpen your understanding of the financial markets with this incisive volume Equity Markets, Valuation, and Analysis brings together many of the leading practitioner and academic voices in finance to produce a comprehensive and empirical examination of equity markets. Masterfully written and edited by experts in the field, Equity Markets, Valuation, and Analysis introduces the basic concepts and applications that govern the area before moving on to increasingly intricate treatments of sub-fields and market trends. The book includes in-depth coverage of subjects including: · The latest trends and research from across the globe · The controversial issues facing the field of valuation and the future outlook for the field · Empirical evidence and research on equity markets · How investment professionals analyze and manage equity portfolios This book balances its comprehensive discussion of the empirical foundations of equity markets with the perspectives of financial experts. It is ideal for professional investors, financial analysts, and undergraduate and graduate students in finance.