Ohlson Model In Stock Valuation In The Power Industry

Our securities market has lasted for twenty years in the history. At present, the number of listed companies, the total equity, the total value, the total raised capital, and the investor number have come to an unprecedented new level; and China's stock market has become an important part of the socialist market economy. The scale of the stock market has expanded greatly, the reform and innovation of the market has been deepened, and the information disclosure in the stock market will continue to be improved and standardized. The degree of investors'institutionalization expanded and the market share price is no longer the main force of will. As investors, the top priority is to evaluate the stock and to make effective investment decisions.This article is to find a good model of partial applicability in our current conditions, and that will give some reference for the investors to make investment decision. Ohlson Model is a method to evaluate the stock by taking full advantages of net assets and residual income and non-accounting information in the accounting data on the basis of Remaining Income Value Mode(lRIV). With its emphasis on the scale of net assets and the residual income, the model can be applied to the valuation of some stocks with greater basic investment and larger scale of net assets, such as power industry, which is the object of this study.This article is divided into three parts:First,it is mainly to introduce and make comparison among Cash Discount Dividends Model(DDM), Free Cash Flow Equity Model (FCFE), RIV Model and Ohlson Model. Furthermore, it is to illustrate the advantages of Ohlson Model on valuing the electric power listed companies.Second,it is the introduction of the related parameters in Ohlson Models'application, mainly about the basic form, major assumptions and important parameters of Ohlson Model. At the same time, it applies the model to the selection of data and variable of the electric power listed companies the selection of 47 electric power listed companies and the calculation of the data of Ohlson Model. And the illustration of sample resources, the selection of relevant data and the confirmation of variable and restates Ohlson Model from the aspect of the electric power listed companies.Finally,it is the assessment and application effect of electric power listed companies. It is to get the theory value of electric power listed companies under the Ohlson Model, FCFE Model and RIV Model, which is calculated by the data got from 47 electric power listed companies. Make comparison between the results of these models and their actual price by calculating the MAE, MPE, RMSE and Theil Coefficient and it is proved that Ohlson Model is with the minimum error. Therefore,it is the conclusion that Ohlson Model has advantages over traditional FCFE Model and RIV Model in power industry in our country.