A Proposed Archival Empirical Research Methodology to Test Reliabitiy and Validity of Discounted Residual Income Model

Abstract

Kerlinger and Lee (2000) defines reliability as “the proportion of the ‘true’ variance to the total obtained variance of the data yielded by a measuring instrument” and content validity as “representativeness or sampling adequacy of the content—the substance, the matter, the topic of measuring instrument”. The goal of this research is to provide an empirical research method to quantify the reliability and validity of residual income model in the prediction of the value of equity (stock price), by proposing to compare all active U.S. firms from 1981 to 2005 traded in the NYSE and the AMEX (the time period and listed stocks are subject to change based upon the availability of data from different sources). 
 JEL Classification Codes: G10, G17, M41, Z10.

Universal Basic Buybacks

“…A simple Google search will produce results too numerous to count, including textbooks, practitioner and academic articles, website content, videos, and many other references to the model. (Huong, 2011;Cheng, 2015;Ashton, et.al., 2015;Liu, 2021) For the RIM to be most useful in examining the effects of share repurchases, it helps to reformulate the financial statement inputs needed to properly focus the analysis. Following the analysis in (Nissim, et.al., 2001), the financial statement reformulation here separates operating and financing items to highlight relevant features of share repurchases that properly categorize these transactions as financing related.…”