Work

The impacts of business cycles on the residual income valuation model: Empirical results from Taiwan stock markets

Year: 2025

Type: article

Abstract: This research offers an additional asset pricing valuation viewpoint that combines theory with practice, enabling investors and fundamental analysts to either establish or adjust their portfolios if there is a trend to reverse the current economic atmosphere affected by financial and economic uncertainty (Liu & Chu, 2024). It presents a mixed model based on the residual income valuation (RIV) framework of Ohlson (1995), incorporating two new factors: business cycles and financial items. The former helps valuation models predict stock prices (Bolten & Weigand, 1998), while the latter is useful at stock pricing models (Huang & Zhang, 2012). We find that both business cycles and disaggregated financial components significantly influence stock valuation, and that the impact of accounting items in financial reports varies across different business cycles.

Source: Asia Pacific Management Review

DOI: 10.1016/j.apmrv.2025.100366

Authors: Yu-Hong Liu, Tang-Lin Hwang

Institution: National Cheng Kung University

Language: English

Topic: Financial Reporting and Valuation Research

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,000

Funders: National Science and Technology Council, National Science and Technology Council