会议专题

A Theory of Deflators in Returns Studies and the Relation between Returns and Valuation Studies

The purpose of this study is to develop a theory for selecting deflators on mapping grounds. As Christie (1987) pointed out, there is currently no theory connecting accounting and economic variables. Therefore, there is no single mapping and deflator that everyone can agree is correct. In developing a theory of deflators, this study takes a rather positive approach, starting with returns models employing two most frequently used deflators and derives a mapping from accounting variables to market value implies by each deflator. The two deflators are the market value of equity at the beginning of each period and expected accounting earnings.The main findings are as follows. The market value deflator in returns studies is based on a linear mapping from dollar (i.e., undeflated) unexpected earnings to dollar residual returns and implies a linear valuation model mapping from accounting earnings to market value. On the other hand, the earnings deflator in returns studies, is based on a nonlinear mapping from dollar unexpected earnings to dollar residual returns, implying a nonlinear earnings valuation model.

Youngin Pyo

Accounting Area, School of Business Administration, Kangwon National University

国际会议

The 7th Northeast Asia Management & Economy Joint Conference(第七届东北亚经济与管理论坛)

北京

英文

449-459

2008-10-25(万方平台首次上网日期,不代表论文的发表时间)