An Accounting-Based Measure of Valuation Uncertainty
Year: 2026
Type: article
Abstract: ABSTRACT Existing measures of valuation uncertainty are indirect or available for limited samples. We use an accounting-based valuation model to estimate a set of hypothetical intrinsic equity values and measure uncertainty by their spread. We show that our measure reflects both cash flow and discount rate uncertainty, explains price ranges in IPO prospectuses and M&A fairness opinions, and incrementally predicts various future outcomes indicative of uncertainty. An application of our measure to a popular asset pricing context yields new insights into the properties of the value premium. Overall, our paper demonstrates how accounting information can be used to summarize uncertainty about intrinsic equity value. Data Availability: Data used in the article are available from public sources cited in the text. JEL Classifications: M41; G12; G14.
Source: The Accounting Review
Authors: Andrey Golubov, Theodosia Konstantinidi
Institutions: University of Toronto, City St George's, University of London
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7147166931
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