Issue 4, 2006

Volkov D. L., Berezinets I. V. Value-Based Management: Validity Problem of Accounting-Based Valuation Models

Value-based management concept assumes developing of the value measurement system which has to be based on particular valuation model. This article deals with analysis of equity valuation models which are based on accounting measures. This analysis is focused on the problem of validity of analytical models. Validity of the model is defined by the level of correlation between market and fundamental values as a result of application of particular valuation model. Definition of residual income models and its main assumptions are given in the article. Set of valuation models under different modifications of assumptions is developed also. All models are tested using data of Russian market from 2000 to 2005 year.

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