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A Test Of The Ohlson Model On The Italian Stock Exchange

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  • Antonella Silvestri
  • Stefania Veltri

Abstract

This article belongs to the current in research literature, which is concerned with value relevance. Its main aim is to test the impact of the current and future accounting variables on the firm’s market value, by analyzing these relations with reference to the financial sector of the Italian Stock Exchange. To pursue this objective we carried out a multiple linear regression analysis, within a model inspired by the Ohlson model (1995). The model employed verified the research hypotheses for following (subsequent) stages by testing at first the impact of the current accounting variables, then of the future ones on the firm’s market value. The results of the analysis show that the relation between the accounting variables (current and future) and the market price, after controlling for market risk, is fully proved on the Italian market, meaning that investors price accounting data in their firm’s evaluation process. The article contributes to expand the number of empirical research studies on the value relevance of accounting variables, by analyzing this theme on a Stock Exchange market not yet explored from this perspective. The main originality of the article consists in its being one of the first research studies to test the validity of the Ohlson model (1995) in its original version on the Italian market.

Suggested Citation

  • Antonella Silvestri & Stefania Veltri, 2012. "A Test Of The Ohlson Model On The Italian Stock Exchange," Accounting & Taxation, The Institute for Business and Finance Research, vol. 4(1), pages 83-94.
    • Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:83-94
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    More about this item

    Keywords

    Value relevance; Ohlson model; analysts’ forecasts; financial sector.;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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