City Research Online

Abstract

Existing measures of valuation uncertainty are indirect or available for limited samples. We use an accounting-based valuation model to estimate a set of hypothetical intrinsic equity values and measure uncertainty by their spread. We show that our measure reflects both cash flow and discount rate uncertainty, explains price ranges in IPO prospectuses and M&A fairness opinions, and incrementally predicts various future outcomes indicative of uncertainty. An application of our measure to a popular asset pricing context yields new insights into the properties of the value premium. Overall, our paper demonstrates how accounting information can be used to summarize uncertainty about intrinsic equity value.

Publication Type:	Article
Additional Information:	Copyright 2026 Andrey Golubov and Theodosia Konstantinidi. The Accounting Review published by the American Accounting Association. This is an open access article licensed under Creative Commons Attribution CC-BY 4.0, which permits use, distribution, and reproduction in any medium, provided the original work is properly cited.
Publisher Keywords:	Valuation uncertainty, residual income valuation, valuation mistakes, value premium
Subjects:	H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance
Departments:	Bayes Business School Bayes Business School > Faculty of Finance
SWORD Depositor:	Symplectic Administrator

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