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Valuation of Slovene Publicly Traded Companies with a Valuation Model Based on Expected Earnings and Growth Opportunities  [PDF]
Igor Stubelj
Managing Global Transitions , 2010,
Abstract: The article sheds light on valuating Slovene publicly traded companies. The research aim is to solve the problems about company valuation in an emerging market, such as the Slovene market certainly is. The critical point is how to evaluate the variables to put in the valuation model. The chosen methodology deals with these problems, and minimizes the analyst’s subjective judgment and the bias the analyst puts into the valuation. Twenty Slovene publicly traded companies are valuated with a valuation model based on expected earnings and growth opportunities. The research provides the assessment and the usefulness of valuation with the model and the conclusions from the valuation results.
The Value Relevance of Book Values, Earnings and Cash flows: Evidence from South Korea  [cached]
Gee Jung Kwon
International Journal of Business and Management , 2009, DOI: 10.5539/ijbm.v4n10p28
Abstract: The purpose of this paper is to investigate the relative and incremental value relevance of book value, accounting earnings and cash flows in security prices. The study basically uses Myers (1977), Ohlson (1995) and Feltham and Ohlson (1995) valuation model and the paper performs analyses for all samples divided into profit/loss firms and earnings managed/non-earnings managed firms to observe changes in value relevance over the periods of 1994-2005 in Korean stock markets(4,865 firm-year observations). The empirical results of the paper indicate that book value is the most value relevant variable and cash flows have more value relevance than accounting earnings in all samples, subsamples and periods. The results also show that combined value relevance of book value and cash flows is more value relevant than that of book value and accounting earnings, suggesting that cash flows can be a substitute for accounting earnings in equity valuation model. The important contribution of the study is documenting the deteriorated value relevance of accounting earnings and the increased value relevance of cash flows in equity valuation. This may be just limited to the period of 1994-2005 in Korean stock markets, or this could be the true pattern in which accounting earnings play no significant role in security prices.
Opportunities Knocking: Residual Income Valuation of an Adaptive Firm  [PDF]
Kenton K. Yee
Physics , 2000,
Abstract: Maintaining a competitive edge requires a firm to replace deteriorating business lines with new projects. Accordingly, part of a firm's value resides in its ability to exploit new opportunities. This article incorporates adaptation into Ohlson's residual income valuation framework and obtains a non-linear (convex) valuation formula. Although parsimoniously cast, the model makes two predictions which are consistent with phenomena reported in the empirical literature: earnings convexity and complementarity. Moreover, the Appendix introduces a new and powerful Equivalence Theorem. This Equivalence Theorem relates Modigliani-Miller dividend invariance to complementarity and earnings convexity in accounting-based valuation. For Web-based Abstract, see: http://papers.ssrn.com/paper.taf?abstract_id=239368
A Comparative Study Between Free Cash Flows and Earnings Management  [PDF]
Dr. Amalendu Bhundia
Business Intelligence Journal , 2012,
Abstract: This paper examines and compares free cash flows in the firms listed in Indian Stock Exchange with an emphasis on earning management. The main purpose of the study is the inquiry of disparity between free cash flows in Indian Stock Exchange with an emphasis on earnings management. Data and statistics of free cash flows and earnings management variables are measured by Len and Poulsen (1989) model and Jones model. The results of this study signify that there is a positive significant relationship between earnings management and free cash flows and confirm that firm's free cash flows can stimulate earnings management.
The Importance of Price Earnings Ratio in Equity Valuation on Stock Exchange Market
Neculai Tabara,Andreea Vasiliu
Acta Universitatis Danubius : Oeconomica , 2011,
Abstract: There are many methods used to value equity and companies. Most of them fail to give arealistic value to the firm being valuated. The most used technique is discounted cash flow method.Because of its weaknesses, the investors are using more and more another approach to ratecompanies. This is relative valuation. The essence of this methodology depends critically on twocomponents: the multiple that is used and the comparables that are chosen. Depending on whatmultiple we use we may be able to determine the Value of Equity or the Global Value of Enterprise.This paper focuses on equity valuation using multiples. We present the methodology of valuingequity of a non- listed company with the purpose of establishing a share price for the first time on thestock exchange market. The multiple selected is price earnings ratio, calculated as a median for thepeer group. The comparable companies are defined as being those who are listed on the stockexchange market in the same class as the company for which we want to find a share value. Furtherstudies on the subject refer to other multiples used in relative valuation.
The Use of Reported Cash Flows versus Earnings to Predict Cash Flows: Preliminary Evidence from Qatar
Helmi Hammami
Business Systems Review , 2012, DOI: 10.7350/bsr.a10.2012
Abstract: The study aims to empirically investigate the predictive ability of reported cash flows versus earnings to predict future cash flows in a market situated in a high growth rate economy such as Qatar. The sample of the study consists of companies on the Doha Securities Market (Qatar Exchange) for the period 2004-09. Qatar is a very interesting context to explore especially after the quick reputation it is gaining at the international scene. We provide evidence on the ability of earnings and cash flow measures to forecast one period or two-period ahead cash flows. However, the results support the superiority of cash flows over earnings in predicting future cash flows. Furthermore, with the exception of CFOP, our research model reports that CFFIA and CFFA are better predictors of themselves. NIDPR – A traditional cash flow measure is a good predictor of CFOP. Finally empirical findings show that cash flow measures and earnings are not correlated suggesting the specificities of each are different.
Investigating the persistence of earnings components and pricing test of abnormal changes in cash
Yaser Ahmadi,Khosro Faghani Makarani
Management Science Letters , 2013,
Abstract: This paper investigates the persistence of earnings components and pricing test of abnormal changes in cash for selected firms listed on Tehran Stock Exchange (TSE). The proposed study gathers the necessary data from 166 firms over the period 2004-2012 from firms whose shares were actively traded on TSE market. The study uses Panel data and with the implementation of linear regression technique examines four hypotheses. The results indicate that abnormal negative changes in cash are more persistence than positive abnormal changes. In addition, both positive and negative abnormal changes are more persistence than accruals. Market also has a good perception on abnormal positive and negative changes in cash.
How to Perform Discounted Cash Flow Valuation?
S awomir Janiszewski
Foundations of Management , 2011, DOI: 10.2478/v10238-012-0037-4
Abstract: Within the last few decades the quickly accelerating globalization processes contributed to rapid increase in the value of the global capital markets, and mergers and acquisitions transactions. This implicated the rising importance of methodologies that enable investors to efficiently value the companies. The aim of this elaboration is to present practical approach towards the discounted cash flow company valuation method, considered one of the most effective but simultaneously one of the most sophisticated among all. The article comprises purely theoretical as well as practical knowledge, based on the author's broad professional experiences.
Accruals, cash flows and earnings in European privately held fims
Amor Tapia, Borja,Tascón Fernández, María Teresa
Pecunia : Revista de la Facultad de Ciencias Económicas y Empresariales , 2011,
Abstract: Este trabajo examina las propiedades de los ajustes al devengo, los flujos de caja y los resultados en las empresas europeas no cotizadas. A partir de varias hipótesis sobre la persistencia de losresultados y sus componentes, encontramos que las empresas no cotizadas parecen comportarse de forma diferente a la evidencia encontrada previamente sobre las empresas cotizadas. Lasdiferencias son significativas cuando los ajustes al devengo son extremos, dado que la persistencia del ROA y de los flujos de caja siguen patrones de comportamiento distintos a los encontrados en las empresas estadounidenses cotizadas. Pero contrariamente a nuestrashipótesis, las diferencias en la persistencia no son significativas cuando las empresas no cotizadas publican resultados positivos frente a resultados negativos.This paper examines the properties of accruals, cash flows and earnings in European privately held firms. We start from several hypotheses about the persistence of earnings and its components, finding that private companies seem to behave in a different manner than the publicly traded firms tested in previous literature. As hypothesized, differences are significant when accruals are extreme, though in European private firms, persistence of ROA relative to cash flow follows a different pattern than in US public firms. But contrary to our expectations, differences in persistence are not significant when companies report positive versus negative earnings.
Information Content of Earnings and Operating Cash Flows: Evidence from the Tehran Stock Exchange  [cached]
Abbasali Pouraghajan,Milad Emamgholipour,Faramarz Niazi,Ali Samakosh
International Journal of Economics and Finance , 2012, DOI: 10.5539/ijef.v4n7p41
Abstract: The main objective of this study is to evaluate the relative and incremental information content of earnings and operating cash flows in the companies listed in Tehran Stock Exchange. Moreover, the present study investigates the loss effect on the information content of earnings and operating cash flows. For this purpose, we investigate and analyze a sample of 475 firm-years from the companies listed in Tehran Stock Exchange during the years 2006-2010.The results indicate that, the earnings have more information content than operating cash flows in explaining stock returns. In addition, earnings model is preferable in explaining stock returns than operating cash flows model. Also, results show that earnings have positive effect and loss has negative effect on earnings information content and operating cash flows. zed eco ? e feared LDCs fragile financial systems and their potential policy mismanagement given their lack of familiarity. Incongruously, markets have taken revenge on the “rentiers” and empirical evidence has shown that technocrats running the international financial system are also prone to big mistakes with adverse economic consequences.
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