The importance of accounting data for determining of firm value and risk and empirical evidence from ISE (Istanbul Stock Exchange)

Determination of the value of the firm in terms of business environments is a major issue. The implementation of these valuation methods is a process that requires a number of measurements. In this study, first, value, risk and accounting information are determined and described the relationship with each other. After that, some information about valuation methods and risk measurement methods are explained. Risk measurement methods based on accounting data as an alternative to risk measurement methods are introduced.After, informing valuation methods and risk measurement methods, statistical relationship between accounting beta, generated under the risk measurement methods based on accounting data by the analysis of panel data, and beta, generated under the capital asset pricing model (CAPM), is measured. The application is made in the ?Stone and land-based industry? within the ISE National Index. After this measurement, ß equation is generated by the significant accounting beta and beta coefficient created by the CAPM. An estimated of the beta coefficient is obtained to be used as the cost of equity in the valuation of the firm by this equation which is a mix of accounting beta. The second part of the application chapter in this study is about the valuation of the firm. In this part, the determination of the valuation of the firm is studied using the firms? historical information. In this sense, the future cash flow projections were made to determine the valuation of the firm. By the 205periodic cost of equity cash flows, the valuation of the all companies by discounting in the sector was identified. t statistic applied to the value of the firm and the market value obtained from the result of the valuation, and values were not statistically different from each other. So there is a significant relationship between the calculated value of the firm and the market value in this study. This is a significant evidence to understand that the method used and value of the firm is indicator for the market value. The aim of this study is to demonstrate that the accounting data is very important for the risk measurement and the calculation of the value of the firm and is to determine the value of the firm in this application. This study will be a starting point to the future scientific studies and model can be enhanced. Key Words:1. Accounting data2. Risk measurement methods3. Accounting beta4. Firm value5. Free cash flow equity