Research output: Book/Report/Proceedings › Book
Research output: Book/Report/Proceedings › Book
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TY - BOOK
T1 - Earnings, earnings growth and value
AU - Ohlson, James
AU - Gao, Zhan
PY - 2006
Y1 - 2006
N2 - A recent paper by Ohlson and Jeuttner-Nauroth (2005) develops a model in which a firm’s expected earnings and their growth determine its value. At least on its surface, the model appeals because it embeds the core principle used in investment practice and, further, generalizes the Constant Growth model (Gordon and Williams) without restricting the firm’s dividend policy. This text reviews the valuation model and its properties. It also extends previous results by analyzing a number of issues not adequately covered in the original paper. These topics include the precise nature of dividend policy irrelevancy, how the model relates to other well-known valuation models, the role of accounting principles, and how it can be developed on the basis of an underlying information dynamics. A central result shows why the model should be accorded “benchmark” status.
AB - A recent paper by Ohlson and Jeuttner-Nauroth (2005) develops a model in which a firm’s expected earnings and their growth determine its value. At least on its surface, the model appeals because it embeds the core principle used in investment practice and, further, generalizes the Constant Growth model (Gordon and Williams) without restricting the firm’s dividend policy. This text reviews the valuation model and its properties. It also extends previous results by analyzing a number of issues not adequately covered in the original paper. These topics include the precise nature of dividend policy irrelevancy, how the model relates to other well-known valuation models, the role of accounting principles, and how it can be developed on the basis of an underlying information dynamics. A central result shows why the model should be accorded “benchmark” status.
KW - Earnings
KW - Earnings growth
KW - Valuation models
M3 - Book
SN - 1-933019-42-5
BT - Earnings, earnings growth and value
PB - Now Publishers
CY - Hanover
ER -