Empiracle Research Of The Applicability Feltham-Ohlson Model: Evidence From China

Valuation of listed companies has always been concerned by all stakeholders of stock market, and how to use accounting information to estimate the value of listed companies is also an important topic of accounting academics. New research topic comes up in regard of the rise of China's stock market. That is whether foreign classical theory, such as Feltham-Ohlson model, could be applied to emerging stock market like China and if so, how to apply. In this paper, Feltham-Ohlson model studies at home and abroad are reviewed. Based on the analysis of Feltham-Ohlson model, an empirical research about the three different forms of linear information dynamic and valuation function is carried out, using a research sample of 6664 observations from 833 listed companies between 2001 and 2008. The purpose is to improve and standardize the basis of the empirical application of Feltham-Ohlson model. The result of this study supports the applicability of Feltham-Ohlson model in Chinese stock market, and the degrees of applicability of the three forms of linear information dynamic and valuation function are different.