A Test of the Ohlson Model on the Italian Stock Exchange

Accounting & Taxation, Vol. 4, No. 1, p. 83, 2012

12 Pages Posted: 23 Dec 2011 Last revised: 12 Dec 2012

See all articles by Antonella Silvestri

Antonella Silvestri

Università degli Studi della Calabria

Stefania Veltri

Università degli Studi della Calabria

Date Written: December 1, 2011

Abstract

This article belongs to the current in research literature, which is concerned with value relevance. Its main aim is to test the impact of the current and future accounting variables on the firm’s market value, by analyzing these relations with reference to the financial sector of the Italian Stock Exchange. To pursue this objective we carried out a multiple linear regression analysis, within a model inspired by the Ohlson model (1995). The model employed verified the research hypotheses for following (subsequent) stages by testing at first the impact of the current accounting variables, then of the future ones on the firm’s market value. The results of the analysis show that the relation between the accounting variables (current and future) and the market price, after controlling for market risk, is fully proved on the Italian market, meaning that investors price accounting data in their firm’s evaluation process. The article contributes to expand the number of empirical research studies on the value relevance of accounting variables, by analyzing this theme on a Stock Exchange market not yet explored from this perspective. The main originality of the article consists in its being one of the first research studies to test the validity of the Ohlson model (1995) in its original version on the Italian market.

Keywords: Value relevance, Ohlson model, analysts’ forecasts, financial sector

JEL Classification: G14, G21, G22, M41

Suggested Citation

Silvestri, Antonella and Veltri, Stefania, A Test of the Ohlson Model on the Italian Stock Exchange (December 1, 2011). Accounting & Taxation, Vol. 4, No. 1, p. 83, 2012, Available at SSRN: https://ssrn.com/abstract=1947071

Antonella Silvestri (Contact Author)

Università degli Studi della Calabria ( email )

Ponte Bucci, Cubo 3C
Rende, Cosenza 87036
Italy

Stefania Veltri

Università degli Studi della Calabria ( email )

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