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Fundamental Analysis Models in Financial Markets ? Review Study

Author

Listed:
  • Ahmed Soliman Wafi

    (Faculty of Commerce - Cairo University)

  • Hassan Hassan

    (Faculty of Commerce - Cairo University)

  • Adel Mabrouk

    (Faculty of Commerce - Cairo University)

Abstract

The purpose of this paper is an attempt to reach a better stock valuation model of the Fundamental Analysis Approach, by reviewing the theoretical foundations and literature reviews.By reviewing the theoretical foundations for each model of the fundamental analysis models, and sequentially beginning of the Discounted Dividend Model (DDM), through a Multiplier Models, and finally the Discounted Cash Flow Model (DCFM), we find that all these models have strengths, despite the lack of accuracy, because it is required financial efficiency market. Recently Ohlson (1995) stated the simulated benefit in the formulation of the Residual Income Model (RIM). The Ohlson Model identifies the relationship between stock values and accounting variables.By reviewing the literature reviews, in financial markets, we conclude that the best model that can be relied upon to predict stock value, that proved credibility in both emerging and developed markets, is Residual Income Model (RIM), which doesn't require financial efficiency for its application.

Suggested Citation

  • Ahmed Soliman Wafi & Hassan Hassan & Adel Mabrouk, 2015. "Fundamental Analysis Models in Financial Markets ? Review Study," Proceedings of Economics and Finance Conferences 2203827, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:2203827
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    File URL: https://iises.net/proceedings/4th-economics-finance-conference-london/table-of-content/detail?cid=22&iid=061&rid=3827
    File Function: First version, 2015
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    Citations

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    Cited by:

    1. Prince T. Medina, 2018. "Equity Analysis in Buying Company Shares on the Philippine Stock Exchange," GATR Journals jfbr148, Global Academy of Training and Research (GATR) Enterprise.
    2. Michael Nana Owusu-Akomeah & Joseph Asare & Emmanuel Atta Kumah & Stephen Owusu Afriyie, 2022. "Holistic Analysis of the Relationship Between Capital Structure and Stock Price of Consumer Staples," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 12(2), pages 38-60.

    More about this item

    Keywords

    Fundamental Analysis; Discounted Dividend Models; Multipliers Models; Discounted Cash Flow Model; Residual Income Model.;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G19 - Financial Economics - - General Financial Markets - - - Other

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