Reconciling value estimates from the discounted cash flow model and the residual income model

This paper examines why practitioners and researchers get different estimates of equity value when they use a discounted cash flow (CF) model versus a residual income (RI) model. Both models are derived from the same underlying assumption -- that price is the present value of expected future net dividends discounted at the cost of equity capital -- but in practice and in research they frequently yield different estimates. We argue that the research literature devoted to comparing the accuracy of these two models is misguided; properly implemented, both models yield identical valuations for all firms in all years. We identify how prior research has applied inconsistent assumptions to the two models and show how these seemingly small errors cause surprisingly large differences in the value estimates. [ABSTRACT FROM AUTHOR]

Hypercapitalism: Language, new media and social perceptions of value

Using examples from contempoary policy and business discourses, and exemplary historical texts dealing with the notion of value, I put forward an argument as to why a critical scholarship that draws on media history, language analysis, philosophy and political economy is necessary to understand the dynamics of what is being called 'the global knowledge economy'. I argue that the social changes associated with new modes of value determination are closely associated with new media form.

What is the value of firms' prior knowledge? Building organisational knowledge capabilities

A firm's prior knowledge facilitates the absorption of new knowledge, thereby renewing a firm's systematic search, transfer and absorption capabilities. The rapidly expanding field of biotechnology is characterised by the convergence of disparate sciences and technologies. This paper, the shift from proteinbased to DNA-based diagnostic technologies, quantifies the value of a firm's prior knowledge and its relation to future knowledge development. Four dimensions of diagnostic and four dimensions of knowledge in biotechnology firms are analysed. A simple scaled matrix method is developed to quantify the positive and negative heuristic values of prior scientific and technological knowledge that is useful for the acquisition and absorption of new knowledge.

The nexus of value chain integration and e-business applications on public sector agriculture R&D management

We examine the potential impact of interconnectivity of value chain partnerships through electronic means (e-business practices) on the management of Public Sector Agriculture R&D in Australia. We review the changing forms of managing research and development, the forces driving these changes, and R&D processes that are theoretically consistent with the move towards value chain involvement and the increase in active constituents in Public Sector Agriculture R&D. We then explore the potential of emerging e-business models to change the patterns of inter-connectivity, speed and omnipresence of partners in the value chain. Three e-business R&D management practices are identified that provide the prerequisite flexibility necessary to take advantage of opportunistic markets. These R&D business practices are: compressing R&D to reduce time to market, fostering co-development to enter a market at the last moment and building flexible products that allow adjustment at the last possible moment. Some fundamental reallocation of existing resources will be required to meet these markets. Implications of these e-business practices for R&D management are discussed.

Boundary value problems for systems of difference equations associated with systems of second-order ordinary differential equations

We study difference equations which arise as discrete approximations to two-point boundary value problems for systems of second-order ordinary differential equations. We formulate conditions which guarantee a priori bounds on first differences of solutions to the discretized problem. We establish existence results for solutions to the discretized boundary value problems subject to nonlinear boundary conditions. We apply our results to show that solutions to the discrete problem converge to solutions of the continuous problem in an aggregate sense. (C) 2002 Elsevier Science Ltd. All rights reserved.

Existence of multiple solutions for second-order discrete boundary value problems

We give conditions on f involving pairs of discrete lower and discrete upper solutions which lead to the existence of at least three solutions of the discrete two-point boundary value problem yk+1 - 2yk + yk-1 + f (k, yk, vk) = 0, for k = 1,..., n - 1, y0 = 0 = yn,, where f is continuous and vk = yk - yk-1, for k = 1,..., n. In the special case f (k, t, p) = f (t) greater than or equal to 0, we give growth conditions on f and apply our general result to show the existence of three positive solutions. We give an example showing this latter result is sharp. Our results extend those of Avery and Peterson and are in the spirit of our results for the continuous analogue. (C) 2002 Elsevier Science Ltd. All rights reserved.

Difference equations associated with fully nonlinear boundary value problems for second order ordinary differential equations

We study the continuous problem y"=f(x,y,y'), xc[0,1], 0=G((y(0),y(1)),(y'(0), y'(1))), and its discrete approximation (y(k+1)-2y(k)+y(k-1))/h(2) =f(t(k), y(k), v(k)), k = 1,..., n-1, 0 = G((y(0), y(n)), (v(1), v(n))), where f and G = (g(0), g(1)) are continuous and fully nonlinear, h = 1/n, v(k) = (y(k) - y(k-1))/h, for k =1,..., n, and t(k) = kh, for k = 0,...,n. We assume there exist strict lower and strict upper solutions and impose additional conditions on f and G which are known to yield a priori bounds on, and to guarantee the existence of solutions of the continuous problem. We show that the discrete approximation also has solutions which approximate solutions of the continuous problem and converge to the solution of the continuous problem when it is unique, as the grid size goes to 0. Homotopy methods can be used to compute the solution of the discrete approximation. Our results were motivated by those of Gaines.

Prediction of outcomes in hypertensive patients with suspected coronary disease

Stress echocardiography has been shown to improve the diagnosis of coronary artery disease in the presence of hypertension, but its value in prognostic evaluation is unclear. We sought to determine whether stress echocardiography could be used to predict mortality in 2363 patients with hypertension, who were followed for up to 10 years (mean 4.0+/-1.8) for death and revascularization. Stress echocardiograms were normal in 1483 patients (63%), 16% had resting left ventricular (LV) dysfunction alone, and 21% had ischemia. Abnormalities were confined to one territory in 489 patients (21%) and to multiple territories in 365 patients (15%). Cardiac death was less frequent among the patients able to exercise than among those undergoing dobutamine echocardiography (4% versus 7%, P<0.001). The risk of death in patients with a negative stress echocardiogram was <1% per year. Ischemia identified by stress echocardiography was an independent predictor of mortality in those able to exercise (hazard ratio 2.21, 95% confidence intervals 1.10 to 4.43, P=0.0001) as well as those undergoing dobutamine echo (hazard ratio 2.39, 95% confidence intervals 1.53 to 3.75, P=0.0001); other predictors were age, heart failure, resting LV dysfunction, and the Duke treadmill score. In stepwise models replicating the sequence of clinical evaluation, the results of stress echocardiography added prognostic power to models based on clinical and stress-testing variables. Thus, the results of stress echocardiography are an independent predictor of cardiac death in hypertensive patients with known or suspected coronary artery disease, incremental to clinical risks and exercise results.