The Study Of Parameter Differences Of Income Method Model In Listed Firms’ Value Appraisal Value Appraisal

Assets appraisal is an important social intermediary industry under the mechanism of market economy. With the ever-deepening economic reform in China, its important position and role in enterprise merger, reorganization of assets and the economic transaction has showed up increasingly. As we all known, the assets appraisal theory originated from the western developed countries, so the theoretical basis for research on this aspect in China mainly relies on the western theory. Then it comes up a discussion of whether the assets appraisal theory is appropriate for the economic market in China. In other words, a "Chinese problem" is put out. In fact, income method model as one of the Evaluation method which is widely used in the western developed countries, has encountered some serious difficulties in China. How to use the income method model effectively to evaluate our asset or the value of the enterprises has become an urgent problem which is need to be solved.This study addresses the research question of how to use income method for asset assessment. More specifically, I investment the difference between dividend discount method and cash flow discount method regarding the scope of application and the parameter estimation of income, discount rate and duration. In addition, I further illustrate the difference above by analyzing three cases from medicine industry. Although the income method has received more and more attention due to its accurate philosophy behind, it encounters the uncertainty of parameter estimation. Firstly, an appreciate discount rate is hard to estimate resulting from the unpredictable factors and the subjective will of evaluator. Secondly, the estimation of the amount of income also needs lots of jobs to do. One should adequately consider the impact of the market prospect and other any factors on income. Considering this situation, three possible suggestions should be proposed to remedy this situation. First, we should acknowledge the importance of the income method for asset assessment. Second, intensify the reform of supervision and regulatory systems. Third, enhance the parameter estimation precision of income method theoretically and practically.