ANALYSIS OF RESIDUAL INCOME MODEL ASSESSMENT VALUATION, ABNORMAL EARNINGS GROWTH AND DISCOUNTED CASH FLOW APPLIED PUBLIC TENDER OFFER TO ACQUIRE SHARE IN BRAZIL
DOI:
https://doi.org/10.11606/rco.v6i16.52664Keywords:
, Valuation, Appraisal Reports of Public Tender Offer to Acquire Shares, Residual Income Valuation (RIV), Abnormal Earnings Growth (AEG), Discounted Cash Flow (FCD).Abstract
A listed company, when it carries out a public tender offer to acquire shares (PTO), retains a specialized firm to conduct an appraisal of the target company, in conformity with applicable regulations. This article examines 97 appraisal reports of PTOs announced in Brazil over the period from 2000 to 2007. The valuation model most often used in these reports was discounted cash flow. Our aim is to examine whether the valuations estimated by models more closely based on accounting numbers, namely residual income valuation (RIV) and abnormal earnings growth (AEG), produce valuations near those estimated by the discounted cash flow method, according to the appraisal reports. We applied the RIV and AEG models to samples of 21 and 39 firms, respectively. The results of the tests performed indicate there are no statistically significant differences between the values estimated by either the RIV or AEG method in relation to those estimated by the discounted cash flow method.Downloads
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