We assess the empirical implications of the valuation model for equity prices developed in Ohlson (1995), by accounting for residual income information dynamics. A key assumption of the Ohlson (1995) residual income model stipulates that next period t + 1 residual income is a linear function of...

We extend the constant discount factor model with intrinsic bubbles developed in Froot and Obstfeld (1991) to account for serial correlation in dividend growth rates. We derive an exact analytical expression for both the present value stock price and an intrinsic bubble component when dividend...