Residual Income Valuation Model In The Chinese Stock Market To More Advanced Applications

The residual income valuation model (RIM), one of the classic valuation models, plays an important role in the valuation theory system. Researchers of western academic circles have made great achievements to the theoretical and empirical study of RIM. This article examines the market foundations of applying RIM, including market development level, market efficiency, systematic risk and the relevance of accounting information and the value of company. After the qualitative and quantitative analysis, this article draws the conclusion that on the whole, the security market of China possesses the conditions of applying RIM, whereas it is imperative to find the improved forms to be more suitable to China' market. On the study of the shortcomings and features of China' security market, this article suggests two improved models of RIM and studies the feasibility and applying of the two models.