Opportunities Knocking: Residual Income Valuation of an Adaptive Firm

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Maintaining a competitive edge requires a firm to replace deteriorating business lines with new projects. Accordingly, part of a firm's value resides in its ability to exploit new opportunities. This article incorporates adaptation into Ohlson's residual income valuation framework and obtains a non-linear (convex) valuation formula. Although parsimoniously cast, the model makes two predictions which are consistent with phenomena reported in the empirical literature: earnings convexity and complementarity. Moreover, the Appendix introduces a new and powerful Equivalence Theorem. This Equivalence Theorem relates Modigliani-Miller dividend invariance to complementarity and earnings convexity in accounting-based valuation. For Web-based Abstract, see: http://papers.ssrn.com/paper.taf?abstract_id=239368
Alternative download source is: http://papers.ssrn.com/paper.taf?abstract_id=239368

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Adaptation and Self-Organizing Systems, Exactly Solvable and Integrable Systems, Popular Physics, Physics and Society

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http://salesiana.dossiersoluciones.com/handle/123456789/79857

Consulte el texto completo en el siguiente enlace:

https://arxiv.org/abs/nlin/0009015
 http://arxiv.org/abs/nlin/0009015
 Journal of Accounting, Auditing, and Finance, v15.3, p. 225 (Summer 2000 issue) Journal of Accounting, Auditing and Finance, Vol 15, No 3, page 225 (summer 2000 issue)

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arXiv