This paper contrasts dividend discount techniques,
discounted cash flow analysis, and techniques based on
accrual earnings when applied to a finite-horizon
valuation. Valuations based on average ex post payoffs
over various horizons, with and without terminal value
calculations, are compared with (ex ante) market prices
to give an indication of the error introduced by each
technique in truncating the horizon. Further, the
relevant
accounting features of each technique are identified and
the source of the accounting that makes it less than
ideal for finite horizon analysis (and for which it
requires a correction) are discovered. pdf
