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留学生毕业论文:Comparative Assessment of Feltham–O

International Research Journal of Finance and Economics

Comparative Assessment of Feltham–OhlsonSign-Oriented & Traditional Models

Department of Accounting, Shahid Chamran University of Ahwaz, IranMaster Accounting
Abstract
In this paper the efficiency of the four adjusted versions of Feltham-Ohlson(1995)models were studied using panel data (during 1998 to 2007) of firms listed on Tehran SockExchange. The first and third 留学生毕业论文versions (traditional models) are similar to Ohlson (1995) andFeltham-Ohlson(1995) models, respectively and the difference is that the other informationvariable has been ignored due to non access to analysts’ forecast. The second and fourthversions (sign-oriented models) attempt to improve traditional models by the segregation ofabnormal earnings in terms of their sign. The research results show that sign-orientedmodels have better performance in the prediction of abnormal earnings compared totraditional model. Using forecasted abnormal earnings in all of the valuation functionsindicate that none of the studied models can appropriately forecast firm’s value. Also, theresults suggest the superiority of Feltham–Ohlson based to the Ohlson based models bothin respect of abnormal earnings forecast and regarding studied firms’ valuation.
Keywords: Linear information models, sign of abnormal earnings, Firm valuation, Clean surplus accounting

1. Introduction
Many factors involve in the economic growth of the society. One of the major elements of thecountries’ economic growth is the existence of advanced financial and monetary markets. Capitalmarket is an element of financial markets. Investors provide the financial resources required for capitalmarket. They attempt to invest their financial resources in firms providing the highest return for them.Investors make investment decisions on the basis of received information.Information has two fundamental roles in capital market. Its first role is to make stock balancedprices affecting on the better assignment of the financial resources and increased firms’ decisionsefficiency. The second role is to enable persons to exchange their current and future consumptionclaims in different conditions and to access the favorable consumption patterns and, also, provide theirshare in social risks (Belkaoui, 2004).International Research Journal of Finance and Economics - Issue 36 (2010) 60Accounting is one of the information resources used by investors. Accounting is a data systemwhich provides investors with information on the firm’s financial status, its operational status as wellas information related to company ability in making cash flow, for decision making. To date various
researches have been conducted to identify that which category of this information plays the major role
in investors’ decision in different countries. In present research, since the required information are



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