Two valuation models based on accounting concepts and measurements are specified and discussed in the paper - a "residual income valuation" model and a "value added valuation" model. Given clean surplus accounting, the first model is identical to a model where future expected dividends and a...

The impact of conservative accounting in residual income valuation (RIV) and abnormal earnings growth (AEG) valuation modeling is investigated in this paper. Unconstrained and two types of constrained model specifications are evaluated regarding their ability to withstand biases in book values...