Market Value Evaluation with Ohlson Model: An Empirical Analysis of ATX Indexed Companies in Vienna Stock Exchange

Abstract:     
Scholars of finance and accounting propose several models on equity valuation. One of these models, namely Ohlson Model, relates market value with accounting numbers and thereby, offers an opportunity of equity valuation based on accounting data. This paper aims to weight the explanatory power of the Ohlson Model on determination of market value of ATX (Austrian Traded Index) companies. For this purpose, the model parameters are estimated on the basis of past data and its precision is weighted with dataset of validation period. Although the differences between estimated market value and value calculated based on stock price are not statistically significant, the model is limited mainly with the abnormal consequences of the recent financial crisis.

Keywords: Ohlson Model, ATX, linear information dynamic, market value, equity valuation

Working Paper Series