How the Equity Terminal Value Influences the Value of the Firm?
The discounted cash flow model (DCFM) views the intrinsic value of common stock as the present value of its expected future cash flows. This paper analyses whether the equity terminal value (EqTV) of the firm calculated by fundamentals is appreciated by the market. It also studies the impact of vari...
| Main Authors: | , , |
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| Format: | info:eu-repo/semantics/article |
| Language: | English |
| Published: |
De Gruyer
2024
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| Subjects: | |
| Online Access: | http://hdl.handle.net/10835/14948 |
| Summary: | The discounted cash flow model (DCFM) views the intrinsic value of common stock as the present value of its expected future cash flows. This paper analyses whether the equity terminal value (EqTV) of the firm calculated by fundamentals is appreciated by the market. It also studies the impact of variations in EqTV and the extent to which the market perceives these variations. Using a sample of 62 Spanish listed companies, this paper shows that EqTV and its variations are positively and significantly correlated with EqTV assigned by the market and its corresponding variations. It therefore corroborates the validity and relevance of the valuation model. |
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