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Accounting Measures of Value Generation: The Residual Income Model

  • Guochang Zhang
Chapter
Part of the Springer Series in Accounting Scholarship book series (KLAS, volume 6)

Abstract

As we embark on this book’s exploration of the accounting-based valuation research, we start by defining the value concept and models set out in the finance literature. The equity value models developed in finance predate valuation research in accounting. They are built around concepts such as dividend or free cash flow which are not at the heart of accrual-based accounting. As such, the role of accounting has not been well explained. In accounting research, we are interested in how accounting data periodically reported by companies convey value generation. Understanding this issue is essential for capital market participants who rely on reported financial data to assess firm value. It is also relevant to accounting standard setters who are mandated to formulate rules governing corporate financial reporting.

Keywords

International Financial Reporting Standard Free Cash Flow Dividend Payment Residual Income Income Statement 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  • Guochang Zhang
    • 1
  1. 1.Hong Kong University of Science and TechnologyKowloonHong Kong SAR

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