Skip to main content

Accounting Valuation Models: A Short Primer

Buy Article:

$48.00 plus tax (Refund Policy)

Abstract:

This note discusses basic issues related to residual income valuation (RIV) and abnormal earnings growth (AEG) models but has only scratched the surface of a complex subject. What clearly emerges from this ‘primer’ is the conclusion that AEG is a more complex valuation model than RIV. This complexity concerns both the mechanics and interpretation of AEG compared to RIV. Furthermore, a study by Penman (2005) raises a question about the usefulness of AEG compared to RIV. His comparisons between RIV and AEG are rather remarkable and suggest that RIV gives estimates of value which are more accurate and less variable than estimates based on AEG. Clearly, these results need further study.

Keywords: Abnormal earnings growth; Accounting valuation models; Residual income valuation

Document Type: Research Article

DOI: http://dx.doi.org/10.1111/j.1467-6281.2007.00240.x

Affiliations: Leonard N. Stern School of Business, New York University

Publication date: December 1, 2007

bpl/abac/2007/00000043/00000004/art00002
dcterms_title,dcterms_description,pub_keyword
6
5
20
40
5

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
X
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more