Empirical Research On The Residual Income Model Based On Regional Economy

Along with the development of market economy, the scale of securities isexpanding as same as the team investors, stock investment has the characteristics ofhuge profits and high-risk, it is a critical step of a successful stock market investmentto predict the stock prices and to implement securities investment activities exactly.Equity valuation is very important, it can reduce the risk of financial markets and thevolatility of the stock market. Many researchers have researched to prove that theresidual income model has more explanation on the stock price than other modelssuch as the dividend discount model, discounted cash flow model, economic valueadded model, option pricing models, etc. Based on the above considerations, as itsstrong theoretical basis and operability, the thesis chooses the residual income modelas the research object. However, in the current study, the item of other information isstill one of the problems of the residual income model, Ohlson has not described theother information specifically in the residual income model, when studying theresidual income model, many later researchers ignored the item of other information.What is the other information specifically referring? And how does it impact themodel, on the basis of considering the item of other information, to study the residualincome model is not common at home.This thesis gets improvement for residual income model from the prospective ofregional economic, on the basis of what has already been achieved, take regionaleconomic indicators as the variable of the item of other information to extend theresidual income model in order to verify whether it can improve the explanation onthe stock price. This thesis chooses the whole listed companies who issue A-shares inthe main board market as sample,firstly,establish the model of the net assets value pershare and residual income per share to the share price, and then, when considering theother information, take regional economic indicators as the variable of the item ofother information to establish the model of the net assets value per share and residualincome per share and regional economic indicator to the share price, after that, comparing their different results. From the empirical results of sample, we can get theconclusion that the extended model has more explanation on the stock price aftertaking the item of other information into consideration, it is inappropriate to ignorethe item of other information when study the residual income model.