A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation
This paper mainly tries to answer three questions by comparing the discounted cash flow model (DCF) and residual earning model (REM). Firstly, which model will perform better in the valuation of equity? Secondly, how about the robustness of the different model? That is, will they give the same resul...
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| Format: | Dissertation (University of Nottingham only) |
| Language: | English |
| Published: |
2005
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| Online Access: | https://eprints.nottingham.ac.uk/20093/ |
| _version_ | 1848792016939384832 |
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| author | Niu, Jie |
| author_facet | Niu, Jie |
| author_sort | Niu, Jie |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | This paper mainly tries to answer three questions by comparing the discounted cash flow model (DCF) and residual earning model (REM). Firstly, which model will perform better in the valuation of equity? Secondly, how about the robustness of the different model? That is, will they give the same result under different assumptions, such as growth rates, evaluation horizons? Thirdly, which model has better explainability on the share price of traded firms? The empirical research result indicates that REM will perform better in terms of accuracy, reliability, robustness and explainability than DCF with shorter valuation horizon. However, when valuation horizon become longer, the situation reversed. |
| first_indexed | 2025-11-14T18:37:42Z |
| format | Dissertation (University of Nottingham only) |
| id | nottingham-20093 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T18:37:42Z |
| publishDate | 2005 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-200932018-03-09T11:31:58Z https://eprints.nottingham.ac.uk/20093/ A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation Niu, Jie This paper mainly tries to answer three questions by comparing the discounted cash flow model (DCF) and residual earning model (REM). Firstly, which model will perform better in the valuation of equity? Secondly, how about the robustness of the different model? That is, will they give the same result under different assumptions, such as growth rates, evaluation horizons? Thirdly, which model has better explainability on the share price of traded firms? The empirical research result indicates that REM will perform better in terms of accuracy, reliability, robustness and explainability than DCF with shorter valuation horizon. However, when valuation horizon become longer, the situation reversed. 2005 Dissertation (University of Nottingham only) NonPeerReviewed application/pdf en https://eprints.nottingham.ac.uk/20093/1/05MBAlixjn1.pdf Niu, Jie (2005) A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation. [Dissertation (University of Nottingham only)] (Unpublished) REM DCF Equity Valuation |
| spellingShingle | REM DCF Equity Valuation Niu, Jie A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation |
| title | A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation |
| title_full | A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation |
| title_fullStr | A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation |
| title_full_unstemmed | A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation |
| title_short | A Comparison between Discounted Cash Flow and Residual Earning Models for Use in Equity Valuation |
| title_sort | comparison between discounted cash flow and residual earning models for use in equity valuation |
| topic | REM DCF Equity Valuation |
| url | https://eprints.nottingham.ac.uk/20093/ |