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1	The relationship between stock price, book value and residual income: A panel error correction approach Brandt, Oskar, Persson, Rickard January 2015 (has links) In this paper we examine the short and long-term relations between stock price, book value and residual income. We employ a panel error correction model, estimated with Engle & Granger’s (1987) two-step procedure and the single equation methodology. The models are estimated with FE-OLS and the MG-estimator. We find that stock prices adjust previous periods equilibrium error. Further, we find that book value has short and long-term effects on stock prices. Finally, this paper finds mixed results regarding residual incomes impact on stock prices. The MG-estimator finds evidence for a short-term relationship, while the FE-OLS provides insignificant or weak support for short-term effects. FE-OLS and MG-estimator find insignificant or weak support regarding residual incomes long-term effects. Accounting based valuation stock valuation residual income Ohlson’s model PECM Cointegration Panel unit root Stock price book value dividends dividend discount model aktier utdelningar residual inkomst aktie värderingar Ohlson's model