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Author: Julia Nasev
Publisher: Springer Science & Business Media
ISBN: 3834984582
Category : Business & Economics
Languages : en
Pages : 129
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Book Description
Julia Nasev examines the impact of conservative accounting numbers on valuation estimates and on real economic decisions such as cost stickiness.
Author: Julia Nasev
Publisher: Springer Science & Business Media
ISBN: 3834984582
Category : Business & Economics
Languages : en
Pages : 129
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Book Description
Julia Nasev examines the impact of conservative accounting numbers on valuation estimates and on real economic decisions such as cost stickiness.
Author: Luis Palencia
Publisher:
ISBN: 9783838324753
Category :
Languages : en
Pages : 184
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Book Description
Author: Young-Soo Choi
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
Prior research using the residual income valuation model and linear information models has generally found that estimates of firm value are negatively biased. We argue that this could result from the way in which accounting conservatism effects are reflected in such models. We build on the conservative accounting model of Feltham and Ohlson (1995) and the Dechow, Hutton and Sloan (1999) (DHS) methodology to propose a valuation model that includes a conservatism-correction term, based on the properties of past realizations of residual income and other information. Other information is measured using analyst-forecast-based predictions of residual income. We use data comparable to the DHS sample to compare the bias and inaccuracy of value estimates from our model and from models similar to those used by DHS and Myers (1999). Valuation biases are substantially less negative for our model, but valuation inaccuracy is not markedly reduced.
Author: Victor L. Bernard
Publisher:
ISBN:
Category :
Languages : en
Pages : 54
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Book Description
Author: Luis Enrique Palencia
Publisher:
ISBN:
Category :
Languages : en
Pages : 366
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Book Description
Author: David J. Ashton
Publisher:
ISBN:
Category :
Languages : en
Pages : 32
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Book Description
In this paper we develop a general framework for evaluating the impact of conservative accounting on the structure of residual income models of equity valuation. This affords a theoretical understanding of the signs and sizes of the valuation weights observed in regression studies of the relationship between prices, book values, earnings and dividends. We proceed to generalize our model of conservatism and are able to show theoretically the likely numerical impact of conservatism on book values, price-earnings ratios and under valuations produced by residual income models. The analysis also affords an understanding of the limitations of empirical investigations of conservatism using linear information dynamics and hence to explain the failure of many such studies to detect conservatism.
Author: Jae B. Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 52
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Book Description
We examine whether financial analysts understand the valuation implications of unconditional accounting conservatism when forecasting target prices. While accounting conservatism affects reported earnings, conservatism per se does not have an effect on the present value of future cash flows. We examine whether analysts adjust for the effect of conservatism included in their earnings forecasts when using these forecasts to estimate target prices. We find that signed target price errors (actual minus forecast) have a significant positive association with the degree of conservatism in forward earnings, suggesting that target prices are biased due to accounting conservatism. Cross-sectional analysis suggests that more sophisticated analysts and superior long-term forecasters adjust for conservatism to a greater extent than other analysts. In additional analyses, we explore the mechanism through which conservatism leads to bias in target prices. We first show that analysts' earnings forecasts are negatively associated with the degree of conservatism, i.e., analysts include the effect of unconditional conservatism in their earnings forecasts. Based on alternative earnings-based valuation models that analysts may use, our evidence suggests that analysts fail to appropriately adjust their valuation multiple for the effect of conservatism included in their earnings forecasts when using these forecasts to derive target prices. As a consequence, we find that, for extreme changes in conservatism, the bias in analysts' target prices due to conservatism leads to a distortion of market prices. The evidence highlights the concern that analysts may not appreciate the valuation implications of conservative accounting which could inhibit price discovery.
Author: Stephen H. Penman
Publisher:
ISBN: 9780071267809
Category : Financial statements
Languages : en
Pages : 754
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Book Description
Valuation is at the heart of investing. A considerable part of the information for valuation is in the financial statements.Financial Statement Analysis and Security Valuation, 5 e by Stephen Penman shows students how to extract information from financial statements and use that data to value firms. The 5th edition shows how to handle the accounting in financial statements and use the financial statements as a lens to view a business and assess the value it generates.
Author: Richard P. Brief
Publisher: Routledge
ISBN: 113560942X
Category : Business & Economics
Languages : en
Pages : 324
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Book Description
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.
Author: Michael John Lacina
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
