Abstract

The market power of firms can take an important effect on their value through the influence of residual incomes. Based on Ohlson’s residual income model (RIM model, also called EBO model), the paper puts financial account—unearned revenue to build the new model, market-power adjusted RIM model. Then we make empirical analysis using the data from 2003 to 2011 year in China capital market. The empirical evidence proofs that unearned revenue has an obvious effect on the value of firms. The result shows that the new model has important complementary role to evaluate the firms’ value in China capital market.

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