Ohlson model based valuation of companies in European emerging markets
https://doi.org/10.38050/01300105201956
Abstract
This article examines the Ohlson model as an alternative way to explain the dynamics of public companies’ market quotations in emerging countries of Europe. In general, Ohlson model is an econometric model that takes into account companies’ financial statements and parameter of “other” information. The purpose of this study is to conduct a comparative analysis of the ability of Ohlson model to estimate the value of companies in emerging markets of Europe. The scientific novelty lies in the following fact: this paper is the first empirical research that simultaneously tests the significance of Ohlson model in emerging countries of Europe. Panel data analysis for seven consecutive years demonstrates the significance of Ohlson model for the whole region of emerging European economies and for markets of Poland and Russia. The results obtained are comparable to findings of the authors who have examined the emerging markets of Latin America and Asia.
About the Authors
N. I. Berzon
NRU Higher School of Economics
Russian Federation
Russian Federation
Moscow
A. B. Khassanov
NRU Higher School of Economics
Russian Federation
Russian Federation
Moscow
References
1. Ratnikova T.A., Furmanov K. K. Analiz panel’nyh dannyh i dannyh o dlitel’nosti sostoyanij. — M.: Izd. dom VShE, 2014.
2. Alfraih M. The role of audit quality in firm valuation: evidence from an emerging capital market with a joint audit requirement // International Journal of Law and Management. — 2016. — Vol. 58 (5). — P. 575–598.
3. Al-Hares O., Abughazaleh N., Haddad A. The effect of “other information” on equity valuation: Kuwait evidence // Journal of Applied Business Research. — 2011. - Vol. 27. — No. 6. — P. 57–70.
4. Baltagi B. Econometric analysis of panel data. — N.Y.: John Wiley & Sons, 1995.
5. Dechow P., Hutton A., Sloan R. An empirical assessment of the residual income valuation model // Journal of Accounting and Economics. — 1999. — Vol. 26. — Issues 1–3. — P. 1–34.
6. Durán-Vázquez R., Lorenzo-Valdés A., Castillo-Ramírez C. Effectiveness of corporate finance valuation methods: Piotroski score in an Ohlson model: the case of Mexico // Journal of Economics, Finance and Administrative Science. — 2014. — No. 19. — P. 104–107.
7. International Monetary Fund. 2018. World Economic Outlook: Cyclical Upswing, Structural Change. — Washington, DC, April.
8. Martínez P., Prior D., Rialp J. The price of stocks in Latin American financial markets: an empirical application of the Ohlson model // International Journal of Business and Finance Research. — 2012. — Vol. 6 (4). — P. 73–85.
9. Ohlson J. Earnings, book values and dividends in equity valuation // Contemporary Accounting Research. — 1995. — Vol. 11 (2). — P. 661–687.
10. Ohlson J. Earnings, book values, and dividends in equity valuation: an empirical perspective // Contemporary Accounting Research. — 2001. — Vol. 18 (1). — P. 107–120.
11. Ota K. A Test of the Ohlson (1995) Model: Empirical Evidence from Japan // International Journal of Accounting. — 2002. — No. 37. — P. 157–182.
12. Özer G., Çam I. The Role of Human Capital in Firm Valuation: An Application on BIST // Procedia — Social and Behavioral Sciences. — 2016. — No. 235. — P. 168–177.
13. Rehman I. U., Shahzad F. The Economic Consequences of Mandatory IFRS Reporting: Emerging Market Perspective // Inzinerine Ekonomika-Engineering Economics. — 2014. — Vol. 25 (4). — P. 401–409.
14. Temiz H., Güleç Ö. F. Mandatory adoption of IFRS in emerging markets: the case of Turkey // Accounting and Management Information Systems. — 2017. — Vol. 16 (4). — P. 560–580.
15. Wang T., Zhang T. The roles of accounting data in equity valuation: evidence from China // China Finance Review International. — 2015. — Vol. 5 (1). — P. 69–87.
16. Zhang X. Value relevance of historical information and forecast information in China: empirical evidence based on the Ohlson and Feltham–Ohlson models // Academy of Accounting and Financial Studies Journal. — 2016. — Vol. 20 (3). — P. 14–27.
17. Zulu M., de Klerk M., Oberholster J. A comparison of the value relevance of interim and annual financial statements // South African Journal of Economic and Management Sciences. — 2017. — Vol. 20 (1). — P. 1–11.
Review
For citations:
Berzon N.I., Khassanov A.B. Ohlson model based valuation of companies in European emerging markets. Moscow University Economics Bulletin. 2019;(5):92-115. (In Russ.) https://doi.org/10.38050/01300105201956
Views:
324
Email this article 