Company discounted cashflow and accounting based valuation models on JSE listed firms in South Africa
Date
2015
Authors
Mafata, Vuyo
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Abstract
The study contributes to the debate on which of the share valuation models between the accounting based and discounted cashflow based valuation models produce an intrinsic share value that is equal to the observed share value. The literature on accounting based valuation models been individual models separately and on general basis with no specific studies on the JSE was done. In this study we focus on the two models, comparing which is superior in producing values close to those observed in the market. The study is based on all firms listed on the main board of the Johannesburg Securities Exchange (JSE) over the period 2004 to 2013.
The results show that it is not a given conclusion that the accounting based models are superior to the discounted cashflow models. Individual techniques within the accounting based models perform differently with some performing much worse than the discounted cashflow models. The study demonstrates that the valuation models do not produce intrinsic values that are equal to the observed prices, though there were results showing some models producing values that are much closer to the observed values.
Description
Thesis (M.M. (Finance & Investment))--University of the Witwatersrand, Faculty of Commerce, Law and Management, Graduate School of Business Administration, 2015.