Measure Of Market Value Research Articles

Financial Reporting, Supplemental Disclosures, and Bank Share Prices

A prominent feature of financial reporting regulation over the past 15 years has been the explosion in the volume of required financial disclosures. A plausible explanation for this development is the shift in regulatory emphasis from viewing the role of the primary financial statements as being to provide complete measures of net income and market value of common equity to viewing financial disclosures (both primary financial statements as well as supplemental disclosures) as providing a rich set

FURTHER EVIDENCE ON THE RELATIONSHIP BETWEEN FEDERAL GOVERNMENT DEBT AND INFLATION

Does an increase in the federal debt cause inflation? Dwyer [1982] using a par value measure of debt, finds no support for such a causal link. Cox [1985] using a market value measure, finds evidence that increases in debt produce higher inflation rates. We reconcile these results by demonstrating that failure to capture the interest rate effects inherent in the market value measure accounts for the finding that debt “causes” inflation. Incorporating interest rates into our test equations using the market value series leads us to conclude that, like the par value series results, increases in federal debt do not cause higher rates of inflation.

MARKET POWER AND THE REQUIRED RETURN TO ELECTRIC UTILITIES

ABSTRACTRecent tests of the ability of powerful firms to reduce their costs of equity capital through a reduction in the systematic risks of their common stock have generated mixed empirical support. This article tests the joint hypothesis of imperfect regulation and of a negative relationship between market power and the betas of a sample of regulated utilities. This study explicitly recognizes beta and alpha instability by estimating the nonstationary parameter market model in a one‐step procedure using econometric methods that efficiently utilize the available cross sectional time‐series data. Further, market value measures of financial leverage are computed and used in the tests as required by theory.

Correction: Accounting and Market-Value Measures of Profitability: Consistency, Determinants, and Uses

Correction: Accounting and Market-Value Measures of Profitability: Consistency, Determinants, and Uses

Accounting and Market-Value Measures of Profitability: Consistency, Determinants, and Uses

This study examines the relationship between accounting and market-value measures of profitability for individual firms. Differences in measures of profitability are observed both between and within industry groups and thus cannot be explained by differences in uncontrolled industry-specific influences. We suggest that both accounting and market can be used as unique but imperfect indicators of profitability. Using a LISREL model approach, we find R & D intensity, television advertising intensity, leverage, and industry growth to be important determinants of firm profits.

Accounting and Market-Value Measures of Profitability: Consistency, Determinants, and Uses

Accounting and Market-Value Measures of Profitability: Consistency, Determinants, and Uses

The Importance of a Market-Value Measurement of Debt in Assessing Leverage

Leverage (debt-to-equity ratio) is an important variable in issues concerning the risk of a firm and its securities. Hamada [1969] has demonstrated theoretically the relationship between leverage and systematic risk.' Numerous empirical studies have found that leverage is a significant variable in association tests on risk. Yet there is a glaring disparity between the theoretical results and the empirical tests. The theory is based on market-value measures of debt and leverage. With few exceptions, the empirical tests use book-value (accounting) measures.2 Although these studies have generally found leverage to be highly associated with systematic risk, there has been no means to evaluate the potential effect of using the book-value measurement as a surrogate for the market-value measurement. This study provides direct empirical evidence on the comparability of the book-value and market-value measures of leverage in association tests on systematic risk. The first section of this paper provides a brief presentation of the

Discounted Cash Flow as a Measure of Market Value

Abstract The discounted-cash-flow method has been used for years in the field of finance and banking. It has been gaining stature for several years in the money management for certain industries, and the oil and gas industry is rapidly recognizing its merit for choosing investment alternatives. The method is suggested as a measure of market value because it is conceptually realistic and suffers from none of the limitations that the other yardsticks do. Data are presented that are indicative of profitable levels of return. Comparisons of various measures of value for five actual sales or valuations are given, and the effects of using any one of the parameters of value have been calculated to show the superiority of the discounted-cash-flow method. An oil and gas investor must place a time value on his money; hence, the discounted-cash-flow method is gaining its acceptance in directing management toward new capital expenditures. It is hoped the method will be utilized and accepted for determining fair market values. Introduction Most engineers whose profession involves evaluating oil, gas, or other mineral interests must sooner or later create hypothetical sales to ascertain the fair market values of mineral reserves. The principal causes for these perplexing situations are the necessities of providing bases for settling estate, gift and ad valorem taxes. If an engineer were pursuing a valuation so that he could advise management or a client concerning the worth of an investment, his requirement would be extremely similar and should be treated no differently. Any profit-conscious investor must either determine if a desirable level of return is realized for a quoted price or the maximum price that can be paid to yield a desirable level of return. In essence then, this problem leans heavily on the basic requirements of engineering valuations; however, the engineer is often faced with defending his basis for determining worth in the ground in addition to the calculated reserves for the interest. The experienced engineer or investor can often determine the approximate value of an oil and gas interest by prudent examination of the engineering computations; however, many officials are reluctant to ascribe to the experience and prestige the valuator has attained in his profession. It then behooves appraisers to utilize a definitive concept for determining fair market values. There have been many concepts formulated and utilized, and each is characterized by varying intrinsic weaknesses. it is the purpose of this paper to propose a method that eliminates most of the conjectural features.