An Empirical Examination of the Ohlson (1995) Model

Posted: 13 May 2008

See all articles by Gary

Gary

affiliation not provided to SSRN

Minga Negash

Metropolitan State University of Denver; University of the Witwatersrand

Date Written: December 2006

Abstract

This paper examines the Ohlson (1995) model and documents its validity in explaining share prices using data for 129 firms continuously listed on the Johannesburg Securities Exchange (JSE hereafter), over a twelve year period. More specifically, cross-sectional multiple regressions and panel data least squares procedures are used to examine whether accrual accounting information and a residual income model are useful in explaining variations in year-end share prices. The cross-sectional results indicate that the Ohlson (1995) model does not establish a significant relationship between year-end share prices and accrual accounting information. However, the panel data least square model resulted in significant and positive relationships between year-end share prices and abnormal earnings, abnormal cash dividends and book value of net assets.

Keywords: Valuation, Accrual Accounting, Ohlson Model, JSE, South Africa

Suggested Citation

Swartz, Gary and Negash, Minga, An Empirical Examination of the Ohlson (1995) Model (December 2006). Available at SSRN: https://ssrn.com/abstract=1132811

Gary Swartz (Contact Author)

affiliation not provided to SSRN

Minga Negash

Metropolitan State University of Denver ( email )

Student Success Building
890 Auraria Pkwy #310
Denver, CO 80217
United States

University of the Witwatersrand

1 Jan Smuts Avenue
Johannesburg, GA Gauteng 2000
South Africa

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
538
PlumX Metrics