Empirical Tests of the Feltham–Ohlson (1995) Model

Empirical Tests of the Feltham–Ohlson (1995) Model This paper tests the Feltham–Ohlson (1995) model by transforming the undefined “other information” variables into expectational variables, as suggested by Liu and Ohlson [Liu and Ohlson (2000). Journal of Accounting, Auditing and Finance 15, 321–331]. The signs of the estimated coefficients conform to the model’s predictions using panel data techniques, non-parametric estimation, reverse regressions and portfolio regressions. The tests reject the Ohlson model in favor of Feltham–Ohlson. Nevertheless, the estimated leverage coefficient takes a value of three instead of one for most variations of the model. Also, the 1-year-ahead price predictions of the Feltham–Ohlson model are no more accurate than those of the Ohlson model or a naive earnings valuation model. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Empirical Tests of the Feltham–Ohlson (1995) Model

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Kluwer Academic Publishers
Copyright © 2005 by Springer Science+Business Media, Inc.
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
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