The Theory of Investment Value.

Edwards, George W.; Williams, John Burr

doi:10.2307/2279181

Cited by 4 publications

(3 citation statements)

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“…Identifying such stocks becomes a vital problem for investors. Willian proposed a way to determine the intrinsic value of the stock in 1938 [1]. He states that the intrinsic value of the stock should be determined by its future cash flows, which are the dividend payments and the future price when selling the stock.…”

Section: General Dividend Discount Modelmentioning

confidence: 99%

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An Evaluation of the Dividend Discount Model and its Extensions

Xie²,

Zhang

2023

AEMPS

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The valuation of the stock is one of the most fundamental financial concepts, whereas the Dividend Discount Model is the basis of the stock valuation. The model state that the value of the stock is the sum of the present value of the infinite future dividend. It is, however, impossible for Humans to forecast future dividend accurately. Therefore, the assumption of the future dividend and the extension of the dividend discount model are required. In this paper, the assumption, advantages, and limitations of the general Dividend discount model and its extension, including the Fix dividend discount model, Gordon growth model, Two-stage model, Three-phase model, H-model, Geometric and additive model, and the modified Geometric and additive model, are introduced in this paper, which can be used as a reference for the investors for them to make their financial decision or for the scholars for their researches.

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Section: General Dividend Discount Modelmentioning

confidence: 99%

“…It has been recognized as one of the basic models for valuing the intrinsic value of a stock. In the 1930s, Williams and Gordon proposed this model [1]. Its extension and emergence created the theoretical basis for the quantitative analysis of fictitious capital, assets and company value.…”

Section: Introduction 1backgroundmentioning

confidence: 99%

An Evaluation of the Dividend Discount Model and its Extensions

Xie²,

Zhang

2023

AEMPS

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“…The free cash flow of a company is usually returned in the form of dividends to shareholders. Edwards and Williams (1939) present the dividend discount model:…”

Section: The Dividend Discount Model (Ddm)mentioning

confidence: 99%

An alternative formula for the constant growth model

Forsyth

2019

JEFAS

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Purpose The traditional one-stage constant growth formula has two main underlying assumptions: a company will be able to maintain its competitive advantage for completed investments in perpetuity, and each year in the future, it will be able to generate new investment opportunities with the same competitive advantage, which will also remain in perpetuity. The purpose of this paper is to develop a model that limits the duration of the competitive advantage. Design/methodology/approach A new model is developed, and it is used to value a public company. Findings In this study, the author introduces an alternative formula considering the duration of the competitive advantage, imposing a restriction on the fact that extraordinary returns cannot be sustained forever, and also separates the part of the value explained by the current investments from the portion of value created by future investments. Originality/value The traditional one-stage constant growth model used to determine the continuing value of a company has limitations regarding the duration of the competitive advantage. The developed formula corrects the problem limiting the time extraordinary returns will remain over time.

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Alliance formation in a cooperative container shipping game: Performance of a real options investment approach

Rau

Spinler

2017

Transportation Research Part E: Logistics and Transportation Re

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The Theory of Investment Value.

Cited by 4 publications

References 0 publications

An Evaluation of the Dividend Discount Model and its Extensions

An Evaluation of the Dividend Discount Model and its Extensions

An alternative formula for the constant growth model

Alliance formation in a cooperative container shipping game: Performance of a real options investment approach

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