IDEAS home Printed from
   My bibliography  Save this paper

The Ohlson Model of Evaluation of Companies:Tutorial for Use


  • César Medeiros Cupertino

    (University of Santa Catarina)

  • Paulo Roberto Barbosa Lustosa

    (University of Brasilia)


The article analyzes the structuring and applicability of the Ohlson Model (OM). The methodology used considered: (i) exploratory research as to the objectives of the study; (ii) bibliographical research as to the procedures applied; and (iii) qualitative research as to the addressing of the problem. The review of the literature covered both the origin (discount of dividends, evaluation by the residual profit etc) and the underlying theory of the model. In relation to the internal consistency of the OM, the structuring of the linear informational dynamics was discussed (DIL) and the formula of evaluation as well as the establishing of the entries demanded (parameters and variables). An example was also developed that illustrates the interaction between the coefficients, variables and parameters of the Ohlson modeling. The example permitted the exploration of fundamental concepts and premises for the operating of the Ohlson model, underlying the equations of the DIL (self-regressive models, parameters of persistence etc), to the behavior of the profits (persistence and ability to forecast), to the scenario of evaluation and to some aspects of the accounts model (role of the net worth etc). The study concluded that: (1) there is no consensus in the academic literature about the appropriate method of measuring the parameters of persistence; (2) there are propositions for perfecting the original conception of the OM by means of extensions to the model; (3) the Ohlson model propitiated a series of contributions in the academic literature about capital markets.

Suggested Citation

  • César Medeiros Cupertino & Paulo Roberto Barbosa Lustosa, 2005. "The Ohlson Model of Evaluation of Companies:Tutorial for Use," Finance 0508002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpfi:0508002
    Note: Type of Document - pdf; pages: 16

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Dechow, Patricia M. & Hutton, Amy P. & Sloan, Richard G., 1999. "An empirical assessment of the residual income valuation model1," Journal of Accounting and Economics, Elsevier, vol. 26(1-3), pages 1-34, January.
    Full references (including those not matched with items on IDEAS)

    More about this item


    evaluation of companies; Ohlson Model.;

    JEL classification:

    • G - Financial Economics


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpfi:0508002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.