Empirical Tests of the Feltham–Ohlson (1995) Model

Callen, Jeffrey L.; Segal, Dan

doi:10.1007/s11142-005-4208-3

Cited by 66 publications

(29 citation statements)

References 21 publications

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“…Our model for fi rm value will be based on the seminal work by Ohlson (1995). Since its introduction, it has been a highly infl uential model in fi rm valuation (Callen and Segal, 2005;Gregory et al, 2005). An equity statement that has no income other than net income from the income statement is a cleansurplus accounting statement (Penman, 2001).…”

Section: Responsibility Reporting and Valuation And Regression Modelsmentioning

confidence: 99%

Communication via responsibility reporting and its effect on firm value in Finland

Schadewitz¹,

Niskala²

2010

Corp Soc Responsibility Env

221

202

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In this paper, we fi rst analyzed the responsibility reporting literature with an emphasis on the linkage between responsibility reporting and a fi rm's performance and valuation. Based on the literature review, we developed a research question: How does communication via responsibility reporting affect fi rm value? We analyzed the market valuation of listed Finnish fi rms through a conventional valuation model combined with responsibility reporting. The starting point for our valuation was the Ohlson model. We expanded upon the conventional valuation by studying whether communication via responsibility reporting is related to fi rm valuation. Our research question is linked to the broader academic question of whether earnings worth as an information source has been erased over the last few years. In addition, we contribute to the literature that tries to understand the link between corporate social responsibility and fi rm performance/share performance. Specifi cally, we focused on responsibility reporting according to the Global Reporting Initiative (GRI) and especially on whether the existence of these reports provides a further explanation for fi rm value.Our sample was a population type that covered all listed Finnish fi rms that have adopted GRI. No other responsibility reporting practice was used by listed fi rms in their responsibility reporting communication during the years 2002-2005. The other necessary information for valuation models was obtained from Thomson Financial Services (commercial database).The applied model supported the conclusion that communication via GRI responsibility reporting is an important explanatory factor for a fi rm's market value. The result indicates that responsibility reporting is a part of a fi rm's communication tools in order to decrease information asymmetry between managers and investors. In other words, GRI responsibility reporting is called for in order to produce a more precise market valuation of a fi rm.

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Section: Responsibility Reporting and Valuation And Regression Modelsmentioning

confidence: 99%

Communication via responsibility reporting and its effect on firm value in Finland

Schadewitz¹,

Niskala²

2010

Corp Soc Responsibility Env

221

202

View full text Add to dashboard Cite

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“…However, none of them documented empirical validity of the Ohlson Model. Callen and Segal (2005) showed that the nested Ohlson Model is rejected in favor of the FO Model but it did not improve the predictability power of the future stock prices. Based on these previous studies, we will examine whether the simultaneous equation approach in estimating the information dynamics can improve the predictability power of the Ohlson and FO Model.…”

Section: Ohlsonmentioning

confidence: 99%

“…However, neither theory nor the empirical rules demonstrate how to distinguish between the financial and operating assets. We follow the procedure outlined in Penman (2000) and Callen and Segal (2005) to calculate the operating assets and the financial assets: We also use comprehensive (operating) earnings in the linear information dynamics and examine how it affects the accuracy in forecasting future stock prices. SFAS 130 is effectively adopted in 1998 before which firms were not required to report comprehensive income.…”

Section: Datamentioning

confidence: 99%

Alternative Equity Valuation Models

Chen¹,

Shih²,

Lee³

2014

Handbook of Financial Econometrics and Statistics

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“…Although interesting for empirical work (Liu and Ohlson 2000;Callen and Segal 2005), the major problem with using the forecast (26) for practical purposes is that Φ t is typically undefined and unknown a priori to external investors. However, equation (28) can be put to practical use if the expectation of next-year operating assets is publicly observable.…”

Section: Long-term Forecasting: Steady State Valuation Of the Debt Tamentioning

confidence: 99%

A Simple Accounting-Based Valuation Model for the Debt Tax Shield

Scholze

2010

Bus Res

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Empirical Tests of the Feltham–Ohlson (1995) Model

Cited by 66 publications

References 21 publications

Communication via responsibility reporting and its effect on firm value in Finland

Communication via responsibility reporting and its effect on firm value in Finland

Alternative Equity Valuation Models

A Simple Accounting-Based Valuation Model for the Debt Tax Shield

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