An Empirical Examination of the Ohlson (1995) Valuation Model in South Africa

dc.contributor.authorSwartz, Gary Edward
dc.descriptionFaculty of Commerce School of Accountancy 9108665/p
dc.description.abstractThe debate on the determinants of firm value remains unresolved in finance research. This research report contributes to the debate by examining the validity of the Ohlson (1995) valuation model in South Africa. Using Johannesburg Securities Exchange data, this research report aims to identify whether the book value of assets, accounting (accrual) earnings, and abnormal cash dividends explain the behavior of South African share prices. The Ohlson (1995) model has been successfully tested in a number of recent studies (Collins, Pincus and Xie, 1999; Garrod and Rees, 1998; Collins, Maydew and Weiss, 1997; and Kothari and Zimmerman, 1995). This study attempts to extend this body of work in an emerging market context (South Africa), to determine whether the results obtained in developed markets also hold in an emerging market setting, where required rates of return are higher, liquidity is low, and capital is scarce. The research uses both cross sectional and panel data for 129 Johannesburg Securities Exchange listed companies over the 1992-2003 period to investigate the value relevance of the annual financial statements using the Ohlson (1995) model. Using cross-sectional data, the study indicates that the Ohlson (1995) model cannot be used for value prediction purposes, but does indicate that accrual accounting data is value relevant. However, using a panel data approach resulted in a statistically significant, robust, positive relationship for accounting earnings, book value of assets, and abnormal dividends in predicting firm value.en
dc.format.extent527739 bytes
dc.subjectSecurity Valuationen
dc.subjectAccrual Accountingen
dc.subjectOhlson Modelen
dc.subjectJSE Security Exchangeen
dc.subjectSouth Africaen
dc.titleAn Empirical Examination of the Ohlson (1995) Valuation Model in South Africaen
Original bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Gary Swartz Masters research report Ohlson.pdf
515.37 KB
Adobe Portable Document Format
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
97 B
Item-specific license agreed upon to submission