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Accounting for Value

Accounting for Value


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About the Book

Despite their skills and extensive training, many analysts fail to recognize the basics of good accounting and its deployment in valuation. By focusing on abstract concepts such as measurement basis, exit values, and entity concepts, they miss out on the benfits of a practical approach to valuation. While modern finance has advanced important concepts, including diversification and risk measurement, effective and efficient accounting merges these tools with fundamental analysis to divine a true account of value. Launching an innovative examination of equity valuation as a matter of accounting, Stephen Penman embraces the commonsense ideas of fundamentalists& mdash;good firms can be bad guys, the risk in investing is the risk of paying too much, ignore information at your own peril, beware of paying too much for growth& mdash;and combines them with the principles of modern finance to reestablish the parameters of good analysis. The result anchors the investor, guards against behavioral biases, and challenges speculation. Penman compares fair-value accounting and historical-cost accounting; describes the anchoring of cash flows, book value, and earnings; and details the failure of modern finance to correctly assess value. He concludes with fundamental strategies for accounting for value and a bold proposal for assessing the cost of capital. Altogether, Penman's text is an essential tool for interpreting the greatest financial challenges of our time: the stock market bubble of the 1990s, the credit crisis of 2008, and accounting in the wake of ongoing market instability.

About the Author :
Stephen Penman is George O. May Professor of Accounting and Morgan Stanley Dean Witter Research Scholar at the Columbia Business School. He is the author of Financial Statement Analysis and Security Valuation, for which he received a Wildman Medal Award, and managing editor of the Review of Accounting Studies.

Review :
Penman's book...contains gems on every page - to the point that no one who deals with the market in any capacity should pass by this text until they have committed to memory as many points therein as their limited, mark one, human brains, can hold.--Anthony Harrington "QFinance Blog" For a practical book that will help you understand the use of accounting in understanding stock valuation, Accounting for Value is the resource you are looking for you.-- "Stocker Blog" I highly recommend the essential and fundamentals oriented book Accounting for Value by Stephen Penman, to anyone who is serious about investing in sound, fundamental stocks. This book will benefit the beginning or experienced investor, accountants, and anyone interested in the coupling of accounting with equity valuation.-- "Blog Business World"


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Product Details
  • ISBN-13: 9780231521857
  • Publisher: Columbia University Press
  • Publisher Imprint: Columbia University Press
  • Language: English
  • ISBN-10: 0231521855
  • Publisher Date: 30 Dec 2010
  • Binding: Digital (delivered electronically)
  • No of Pages: 256


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