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An Econometric Model of a Firm’s Financial Statements

Author

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  • Otavio De Medeiros

    (Universidade de Brasilia, Brazil)

Abstract

This paper reports the construction and testing of an econometric model designed to represent a firm’s financial statements. More specifically, the paper aims at showing how a firm’s financial statements can be empirically explained by means of a simultaneous equations structural model connecting macro and microeconomic (market) variables with accounting variables. We also present forecasts for the financial statements. The firm to which the model is applied is a monopoly in the Brazilian domestic market for petroleum products and the largest Brazilian firm in operation. The results obtained are consistent with the expectations associated to the structural model. Applications stemming from the study include financial analysis, forecasting and planning, as well as firm valuation.

Suggested Citation

  • Otavio De Medeiros, 2005. "An Econometric Model of a Firm’s Financial Statements," Finance 0503020, EconWPA.
  • Handle: RePEc:wpa:wuwpfi:0503020
    Note: Type of Document - pdf; pages: 10
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    File URL: http://econwpa.repec.org/eps/fin/papers/0503/0503020.pdf
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    References listed on IDEAS

    as
    1. Stowe, John D & Watson, Collin J & Robertson, Terry D, 1980. " Relationships between the Two Sides of the Balance Sheet: A Canonical Correlation Analysis," Journal of Finance, American Finance Association, vol. 35(4), pages 973-980, September.
    2. Marsh, Paul, 1982. " The Choice between Equity and Debt: An Empirical Study," Journal of Finance, American Finance Association, vol. 37(1), pages 121-144, March.
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    Cited by:

    1. repec:bbz:fcpbbr:v:8:y:2011:i:3:p:20-39 is not listed on IDEAS

    More about this item

    Keywords

    econometric model; accounting; financial statements; Brazilian firm; simultaneous equations;

    JEL classification:

    • G - Financial Economics

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