A Unified Valuation Framework for Dividends, Free Cash Flows, Residual Income, and Earnings Growth Based Models

Valuation techniques are important to practitioners and academics. Although theoretically equity value equals the present value of expected dividends, in practice, higher-level metrics such as free cash flows, earnings, and book values are used for valuation. This paper helps us understand these metrics by: (1) providing a common and simple theoretical framework that shows how these alternative valuation metrics can be used instead of dividends; (2) using the common framework to provide the theoretical underpinnings of earnings-based valuation

Debt vs. Equity: Accounting for Claims Contingent on Firms' Common Stock Performance with Particular Attention to Employee Compensation Options

This paper lays out a comprehensive solution to the problem of accounting for claims based the performance of a firm's stock price. The accounting covers employee stock options, stock appreciation rights, put and call options, convertible debt and preferred stock, warrants, and other hybrid securities. This issue has vexed the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) who have approached the problem on a piecemeal basis, leading to inconsistent treatments of claims that in substance are very similar

On the Analysis of Firms' Cash Flows

This paper revisits the whys and hows of cash flows analysis. The analysis maintains a strict common shareholders' perspective with an equity valuation focus. The paper argues that analysts turn to cash flows to evaluate the potential ambiguity inherent in accruals. The GAAP statement of cash flows, however, (i) relies on a too narrow concept of cash and (ii) lacks a clear bottom-line directly comparable to net income per GAAP. To circumvent (i) and (ii), the paper proposes a framework of Modified Cash Accounting (MCA). A MCA statement of cash earnings satisfies a crucial property: It works like a regular income statement yet eschews all accruals. The paper discusses not only how one motivates and develops a MCA statement of cash earnings, but also how it should be put to use. A crucial issue deals with how one compares the two bottom-lines -- GAAP income vs. that of MCA cash earnings -- given alternative growth scenarios. The paper shows how one can estimate a "normal accrual," which can be added to MCA cash earnings, given assumptions about the firm's growth

Custo de produção, produtividade e renda do eucalipto conduzido para uso múltiplo no norte pioneiro do Estado do Paraná.

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On the relevance of earnings components in valuation and forecasting

Pre-print also submitted to SSRN Archive. The final publication is available at Springer via http://dx.doi.org/ 10.1007/s11156-013-0347-yThis paper articulates the links between relevance of an earnings component in forecasting (abnormal) earnings and its relevance in valuation in a nonlinear framework. The analysis shows that forecasting relevance does not imply valuation relevance even though valuation irrelevance is implied by forecasting irrelevance. Firstly, I consider an accounting information system where earnings components "add up" to a fully informative earnings number. Secondly, I analyze two accounting systems where a "core" earnings component is the relevant earnings construct for valuation and the second earnings component is irrelevant but may be predictable and relevant in forecasting other accounting items. I find that dividend displacement effect on earnings and the dynamics of individual earnings components are critical in this analysis

The valuation of European financial firms

We extend the recent literature concerning accounting based valuation models to investigate financial firms from six European countries with substantial financial sectors: France, Germany, Italy, Netherlands, Switzerland and the UK. Not only are these crucial industries worthy of study in their own right, but unusual accounting practices, and inter-country differences in those accounting practices, provide valuable insights into the accounting-value relationship. Our sample consists of 7,714 financial firm/years observations from 1,140 companies drawn from 1989-2000. Sub-samples include 1,309 firm/years for banks, 650 for insurance companies, 1,705 for real estate firms, and 3,239 for investment companies. In most countries we find that the valuation models work as well or better in explaining cross-sectional variations in the market-to-book ratio for financial firms as they do for industrial and commercial firms in the same countries, although Switzerland is an exception to this generalization. As expected, the results are sensitive to industrial differences, accounting regulation and accounting practices. In particular, marking assets to market value reduces the relevance of earnings figures and increases that of equity

A Unified Valuation Framework for Dividends, Free Cash Flows, Residual Income, and Earnings Growth Based Models

Valuation techniques are important to practitioners and academics. Although theoretically equity value equals the present value of expected dividends, in practice, higher-level metrics such as free cash flows, earnings, and book values are used for valuation. This paper helps us understand these metrics by: (1) providing a common and simple theoretical framework that shows how these alternative valuation metrics can be used instead of dividends; (2) using the common framework to provide the theoretical underpinnings of earnings-based valuation

Luz e temperatura na germinação de sementes de pimenta longa (Piper hispidinervum) e pimenta-de-macaco (Piper aduncum).

As espécies Piper hispidinervum e Piper aduncum destacam-se como produtoras de óleos essenciais ricos em compostos de interesse às indústrias de perfumaria e produtos fitossanitários, como o safrol e dilapiol. Essas espécies encontram-se em processo de domesticação e estudos sobre o processo germinativo de suas sementes são escassos. Assim, objetivou-se com o presente trabalho avaliar a viabilidade de sementes de P. hispidinervum e P. aduncum, buscando determinar um protocolo eficiente para a realização do teste de germinação para cada espécie estudada. O trabalho foi conduzido no período de julho a agosto de 2008, sendo as sementes submetidas a diferentes combinações de temperatura e de luz: 20 °C e 25 °C sob luz branca e difusa; e 20-30 °C alternando escuro (16 h) e claro (8 h), totalizando cinco tratamentos. O tratamento utilizando a temperatura de 25 °C com incidência de luz branca foi o que produziu melhores resultados, com maiores valores de porcentagem e velocidade de germinação sendo, portanto, indicado para avaliação da qualidade fisiológica das sementes de pimenta longa e pimenta-de-macaco

Salmonella Pathogenesis and Processing of Secreted Effectors by Caspase-3

The enteric pathogen Salmonella enterica serovar Typhimurium causes food poisoning resulting in gastroenteritis. The S. Typhimurium effector Salmonella invasion protein A (SipA) promotes gastroenteritis by functional motifs that trigger either mechanisms of inflammation or bacterial entry. During infection of intestinal epithelial cells, SipA was found to be responsible for the early activation of caspase-3, an enzyme that is required for SipA cleavage at a specific recognition motif that divided the protein into its two functional domains and activated SipA in a manner necessary for pathogenicity. Other caspase-3 cleavage sites identified in S. Typhimurium appeared to be restricted to secreted effector proteins, which indicates that this may be a general strategy used by this pathogen for processing of its secreted effectors