A Comparison Of Enterprise Valuation Model

In the western developed country ,the enterprise valuation theory is arisen as the development of capital market,and has been videly used. In Chinese A-stock market,whether the valuation theory based on the effective capital market is suitable and which valuation model can better estimate the enterprise value?This paper will answer these questions. We do systematical research on the theory and methods of enterprise valuation by means of using comparative research and empirical research. The main research task is as follows:Firstly,this paper summarizes the emprical results of abroad an inland;Then establishes the enterprise valuatin theory structure and methodically explains and meticulously compares the three current methods of enterprise valuation. It can be concluded from the researches that the adjusting book value method will always result in big deviation between evaluation result and market value of enterprise as its theory flaw;Because the lower level of our country's capital market,the P/E method is not to be used widespread;Though the cash flow discounted model is perfect in theory ,it has many limitations in applycation. Based on the flaw of the traditional valuation models this paper advocates abnormal earnings model .Emprical results showns that abnormal earnings model can earn much better effect in the valuation.But because the discrete future variables are difficult to be estimated we introduces concepts of continuous time accounting variables and restablishes continuous time abnormal earnings model. This paper uses the datebase of Chinese A-stock market and does the comparison research among dividend-discounting model,equity free cash-discounting model,discrete abnormal earnings model and continuous time abnormal earnings model. For one purpose is to perfect the enterprise valuation model,the second is finding the suitable model in Chinese stock market.The emprical reseach process can be divided two parts,firstly we establish liner-regression model respectivly for dividend-discounting model,equity free cash-discounting model,discrete abnormal earnings model,and select the best model by comparison the adj- R2 ;secondly,we changes the continous time stock value model into a simple linear form and compare the investment effect between the continuous time abnormal model and discrete abnormal earnings model.Empirical results based on A-stocks exchanged in the both bourses show that the dividend-discounting model and equity free cash-discounting model which are widely used in abroad can't suitable in Chinese A-stock market,neither dividend nor free cask flow can be as the basement of valuation;The explanation to stock price of abnormal earnings model is higher than both dividend-discounting model and equity freecash-discounting model ,its adj-R~2 is high 22%,10% and 5% respectively thandividend-discounting model in the year 1998-2000 and 27%,14% and 5% than equity free cash-discounting model; we can earn much better returns by the linear abnormal earnings model than by Ohlson model and from the average investment return,the linear abnormal earnings model is high 14% than Olson model, its abnormal combined return is high 8% than Ohlson model,the effect is very obvious.