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An empirical investigation of the traditional and the clean surplus valuation models

G.A. Karathanassis (Athens University of Economics and Business, Department of Business Administration, Patission 76, 10434, Athens, Greece)
S.N. Spilioti (University of Piraeus, Department of Economics, Karaoli & Dimitriou 80, 18534, Piraeus, Greece)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 October 2003

684

Abstract

Early theoretical work on equity valuation suggests that equity prices are determined by variables such as dividends and growth in dividends. However, these “traditional” views have been challenged by recent studies that seem to indicate that equity prices are determined by book value and discounted future abnormal earnings. This paper employs panel data methodology and equity prices from Athens Stock Exchange empirically to compare the performance of the traditional and the more recent models of equity valuation. The results show that the performance of the Ohlosn (1995) model is quite similar to that of the traditional models even though in some cases Ohlson’s model performance appears to be superior.

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Citation

Karathanassis, G.A. and Spilioti, S.N. (2003), "An empirical investigation of the traditional and the clean surplus valuation models", Managerial Finance, Vol. 29 No. 9, pp. 55-66. https://doi.org/10.1108/03074350310768472

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MCB UP Ltd

Copyright © 2003, MCB UP Limited

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