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James Ohlson (1995)
Earnings, Book Values, and Dividends in Equity Valuation*Contemporary Accounting Research, 11
James Ohlson (1990)
A Synthesis of security valuation theory and the role of dividends, cash flows, and earnings*Contemporary Accounting Research, 6
Gerald Feltham, James Ohlson (1995)
Valuation and Clean Surplus Accounting for Operating and Financial ActivitiesContemporary Accounting Research, 11
P. Asquith, D. Mullins (1983)
The Impact of Initiating Dividend Payments on Shareholders' WealthThe Journal of Business, 56
V. Bernard (1995)
The Feltham-Ohlson Framework: Implications for Empiricists*Contemporary Accounting Research, 11
Gabriel Preinreich (1938)
Annual Survey of Economic Theory: The Theory of DepreciationEconometrica, 6
* Accepted by Michael Gibbins. This discussion was prepared for the 1994 Contemporary Accounting Research Conference. I thank Vic Bernard and an anonymous reviewer for helpful comments. Contemporary Accounting Research Vol. II No. 2 (Sprmg 1995) pp 749-761 ©CAAA Contemporary Accounting Research I intend to address these questions with a series of two-period (threedate) examples. In order to illustrate what the model is and and what it isn't, some examples are consistent with the Ohlson and Fettham's assumptions and others are not. Along with answering the specific questions, the cotlection of examples taken together will, hopefully, illustrate how the models achieve their principal results. The Model Denote the ex-dividend equity price at date t as P,, the dividend as rf,, the eamings as x, and the book value as j , . Denote the risk-free retum as Rj (with a rate of retum of Rf-1), which is an intertemporal constant. There are three cmcial assumptions in the Ohlson paper. The first two are as fottows: P, = %R}%(df^^) r=l and (At) Assumption (Al) is the equilibrium condition. By reference to Ohtson (1990), it actually follows from more primitive assumptions about the economy. In particular, assumption (Al) is the
Contemporary Accounting Research – Wiley
Published: Mar 1, 1995
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