A Unified Valuation Framework for Dividends, Free Cash Flows, Residual Income, and Earnings Growth Based Models
affiliation not provided to SSRN
James A. Ohlson
Hong Kong Polytechnic University - School of Accounting and Finance
NYU Working Paper No. 2451/27480
Valuation techniques are important to practitioners and academics. Although theoretically equity value equals the present value of expected dividends, in practice, higher-level metrics such as free cash flows, earnings, and book values are used for valuation. This paper helps us understand these metrics by: (1) providing a common and simple theoretical framework that shows how these alternative valuation metrics can be used instead of dividends; (2) using the common framework to provide the theoretical underpinnings of earnings-based valuation.
Number of Pages in PDF File: 21
Date posted: October 8, 2008