The Ohlson valuation model

Abstract

This paper aims test and apply the results achieved by Particia Dechow (Dechow, Hutton, & Sloan, 1990) and others in their paper titled “An empirical assessment of the residual income valuation model”. The paper which was published in the Journal of Accounting and Economics particularly lays specific emphasis on the linear information dynamics of the Ohlson model, hitherto ignored or inadequately incorporated by previous papers. We have applied the approach in the above-quoted paper to the 40 component stocks of the NSE Nifty Index. Our analysis points to strong effect of value relevant information not captured in financial statements.