چکیده:
The basic model for valuation of firm is the Dividend Discount Model (DDM). When investors buy stocks, they expect to receive two types of cash flow: dividend in the period during which the stock is owned, and the expected sales price at the end of the period. In the extreme example, the investor keeps the stock until the company is liquidated; in such a case, the liquidating dividend becomes the sales price. The residual income valuation model is an alternative model to the divided discounted model or valuation based on multiples in determining a value of a company. It decomposes the company value of a company into two imaginative parts: (1) the real assets of the company. It is assumed that these assets are leased to the company at a certain rate of return. (2) The present value of the future “Residual Incomes”. Residual income refers to the income part which is achieved above the expected return on the real assets (the previously mentioned first part). Thus we examined the effects of Discounted Residual Income (DRI) on stock price of companies listed in Tehran Security Exchange (TSE) by method curve fitting with sinusoidal functions. Our sample includes 1920 firm- year of companies listed in TSE during the period 2005-2010.The results show that there is a significant relationship between discounted residual income and firm’s value. Also the result shows that if we use method curve fitting with sinusoidal functions for fitting model, we can regress the best model and the explanatory power of model will increase.
خلاصه ماشینی:
, 5 (1), 1-7, Winter 2015 © IAU An Application of Discounted Residual Income for Capital Assets Pricing by Method Curve Fitting with Sinusoidal Functions 1 G.
Darvishi 1,2 Department of Accounting, School of Management and Economics, Science and Research Branch, Islamic Azad University (IAU), Tehran, Iran 3 Department of Accounting, Isfahan University, Isfahan, Iran Received 7 July 2013, Accepted 8 June 2014 ABSTRACT: The basic model for valuation of firm is the Dividend Discount Model (DDM).
Thus we examined the effects of Discounted Residual Income (DRI) on stock price of companies listed in Tehran Security Exchange (TSE) by method curve fitting with sinusoidal functions.
Keywords: Residual income, Valuation model, Sinusoidal functions, Stock price, Discounted models INTRODUCTION The purposes of the corporations are different as viewed by different people.
The Relationship between the Discounted Residual Income and Firm Value The basic model for valuation of firm is the Dividend Discount Model (DDM) (Miller and Modigliani, 1961).
Their study shows that the residual income model results in lower company valuation compared with the discounted cash flow model.
Least-squares fit of a sinusoidal function is to determine coefficient values that minimize: Aଵ ൌ ∑ ycosሺωtሻ (14) A ൌ ଶ ∑ ysinሺωtሻ (15) RESEARCH METHOD Research Sample In this study, research sample is selected by considering all companies listed on Tehran stock exchange from 2005-2010.
Using the same basic principles as a dividend discount model to calculate future residual earnings, we can derive an intrinsic value for a firm's stock.
In this study we examined the effects of discounted residual income on stock price (firm’s value) based on method curve fitting with sinusoidal functions.