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Christian Mandl, Sebastian Lobe, Klaus Röder, Martina Dürndorfer


We augment seminal models based on Ohlson (1995) by integrating the value impact of ratings related to three different extra-financial categories, i. e. corporate governance, human capital, and innovation capital. By integrating extra-financial information in valuation models, we examine whether current market values can be better estimated and future stock performance better predicted when considering this information. For a sample of large European public firms, we find that a model including human capital information and analysts’ earnings forecasts best explains current stock prices. Our model based on human capital information (without analysts’ forecasts) best identifies under- and overvalued companies.

Keywords: Capital Markets, Corporate Governance, Extra-Financial Information, Human Capital, Information Dynamics, Innovation Capital, Intangibles, Ohlson Model; Residual Income, Valuation Models

How to cite this paper: Mandl, C., Lobe, S., Röder, K., & Dürndorfer, M. (2010). Fundamental valuation of extra-financial information. Corporate Ownership & Control, 8(1-2), 296-320.