Earnings, earnings growth and value

James Arvid Ohlson, Zhan Gao

Research output: Journal article publicationReview articleAcademic researchpeer-review

39 Citations (Scopus)


A recent paper by Ohlson and Juettner-Nauroth (2005) develops a model in which a firm's expected earnings and their growth determine its value. At least on its surface, the model appeals because it embeds the core principle used in investment practice and, further, generalizes the Constant Growth model (Gordon and Williams) without restricting the firm's dividend policy. This text reviews the valuation model and its properties. It also extends previous results by analyzing a number of issues not adequately covered in the original paper. These topics include the precise nature of dividend policy irrelevancy, how the model relates to other well-known valuation models, the role of accounting principles, and how it can be developed on the basis of an underlying information dynamics. A central result shows why the model should be accorded "benchmark" status. Ohlson and Z. Gao.
Original languageEnglish
Pages (from-to)1-70
Number of pages70
JournalFoundations and Trends in Accounting
Issue number1
Publication statusPublished - 1 Dec 2006
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Finance


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