The Study Of F-O Modified Model Based On The View Of The Account Information

From1978to1992, after the reform and openness,the China’s securities market was born under the background of economic transition, which indicates the beginning of Chinese stock. In the following twenty years, the development of the stock steps into the abnormal state. Almost all investors hold casual attitude to make the transaction of stocks, they just follow the insider information to decide to buy or sell the shares. This phenomenon leads to the huge risks and obvious drawbacks which exist in the stock market. At the same time, more and more investors believe that only follow the banker to buy the shares will be profitable under the mainstream media’s unscrupulous propaganda. As it is, the investors are bound up in only short-term and neutral investment, and they most choose the kinds of high-risk and high-yield investment shares, which is backfired, however.Based on the above situation, more and more investors including some institutional investors and the general investors start to learn from abroad to looking for the right investment philosophy. It is found one of the investment philosophies--value investment, the main idea of the value investment is focused on reasonably evaluating the value of equity, and the purpose of the value investment is to give investors rational investment. Foreigners study the equity valuation theory and model though two stages. The first stage is based on the dividend to analysis it. The second phase is based on accounting earnings to learn it, this study is proposed by Ohlson in1990which has been the symbol content to decide the equity value. On the basis of the residual income model form Ohlson, Felthan and Ohlson get together to perfect the equity valuation model--F-O model, this model has been become the mainstream to learn equity valuation theories and models.With more and more scholars focusing on the F-O model, some problems are found in the model. However, there is no specific measures for correction of the F-O model.Through the detailed study of F-O model, the author finds out the two aspects to improve and correct the model. With modifying the F-O model,the author uses the financial data(the date includes54stocks which refers to randomly select from the industries of agriculture, forestry and animal husbandry, fishing) to analysis valuation in such industry. The author is looking forward to providing some reference for the vast number of investors in the "value investing" philosophy and investment methods.