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Clean Surplus Accounting Models and Market-based Accounting Research: A Review

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  • Martin Walker

Abstract

This paper reviews recent attempts to provide a rigorous theoretical basis for market-based accounting research based on the pioneering ideas of Ohlson. We argue that the Ohlson development can best be understood as an attempt to restate economic theories of income measurement in the light of advances in the economics of asset pricing under uncertainty. We contrast the Ohlson approach with other economic theories of financial reporting, and conclude that, while the Ohlson approach has made a significant contribution to understanding the theoretical basis of market-based accounting research, it remains to be seen whether the method can be extended beyond the simple linear models that have so far been developed.

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  • Martin Walker, 1997. "Clean Surplus Accounting Models and Market-based Accounting Research: A Review," Accounting and Business Research, Taylor & Francis Journals, vol. 27(4), pages 341-355.
    • Handle: RePEc:taf:acctbr:v:27:y:1997:i:4:p:341-355
    DOI: 10.1080/00014788.1997.9729559
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    3. Beattie, Vivien, 2005. "Moving the financial accounting research front forward: the UK contribution," The British Accounting Review, Elsevier, vol. 37(1), pages 85-114.
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    7. Al-Hares, Osama M. & AbuGhazaleh, Naser M. & Haddad, Ayman E., 2012. "Value relevance of earnings, book value and dividends in an emerging capital market: Kuwait evidence," Global Finance Journal, Elsevier, vol. 23(3), pages 221-234.
    8. Mohamed Sellami, 2006. "Typologie des déterminants comptables de la valeur : Apports de l'approche économique de l'information dans la mesure de la valeur," Post-Print halshs-00558252, HAL.
    9. Michael McCrae & Henrik Nilsson, 2001. "The explanatory and predictive power of different specifications of the Ohlson (1995) valuation models," European Accounting Review, Taylor & Francis Journals, vol. 10(2), pages 315-341.
    10. Clare Roberts & Yue Wang, 2009. "Accounting harmonization and the value‐relevance of dirty surplus accounting flows," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 8(4), pages 340-368, October.
    11. Carien van Mourik & Yuko Katsuo Asami, 2018. "Articulation, Profit or Loss and OCI in the IASB Conceptual Framework: Different Shades of Clean (or Dirty) Surplus," Accounting in Europe, Taylor & Francis Journals, vol. 15(2), pages 167-192, May.
    12. Marc Deloof & Wouter De Maeseneire & Koen Inghelbrecht, 2009. "How Do Investment Banks Value Initial Public Offerings (IPOs)?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(1‐2), pages 130-160, January.
    13. Wang, Y. & Buijink, W.F.J. & Eken Ra, R.C.W., 2003. "The Value Relevance of Dirty Surplus Accounting Flows in the Netherlands," Other publications TiSEM 7cbb031f-08f3-483a-9e58-3, Tilburg University, School of Economics and Management.
    14. Richard Barker, 1999. "The role of dividends in valuation models used by analysts and fund managers," European Accounting Review, Taylor & Francis Journals, vol. 8(2), pages 195-218.
    15. Georgia Pazarzi, 2014. "Comparison of the Residual Income and the Pricing - Multiples Equity Valuation Models," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 88-114.
    16. Alan Gregory & Walid Saleh & Jon Tucker, 2005. "A UK Test of an Inflation‐Adjusted Ohlson Model," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(3‐4), pages 487-534, April.
    17. Kurach Radosław & Słoński Tomasz, 2015. "The PE Ratio and the Predicted Earnings Growth – the Case of Poland," Folia Oeconomica Stetinensia, Sciendo, vol. 15(1), pages 127-138, June.
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    19. Wang, Y. & Buijink, W.F.J. & Eken Ra, R.C.W., 2003. "The Value Relevance of Dirty Surplus Accounting Flows in the Netherlands," Discussion Paper 2003-63, Tilburg University, Center for Economic Research.

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