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Valuation
Kinds of Valuation Terms modified by Valuation Selected AbstractsBREAKING DOWN BUSINESS VALUATION: THE USE OF COURT-APPOINTED BUSINESS APPRAISERS IN DIVORCE ACTIONS*FAMILY COURT REVIEW, Issue 4 2006Donna TumminioArticle first published online: 11 SEP 200 This Note advocates for greater reliance on court-appointed business appraisers in divorce proceedings. After exploring the history of court-appointed experts in American jurisprudence and addressing the specific problems that arise when valuing a business, this Note demonstrates how neutral business appraisers can assist courts in assessing a highly technical matter while simultaneously providing both courts and parties with an accurate, reliable source of information. The Note further provides suggestions for when the appointment of a neutral appraiser may be beneficial. The second section of this Note addresses technical matters that the court must deal with in selecting a reliable expert, including where the court derives its power to appoint a neutral expert, what standards the court should use in appointing the expert, and who should pay the cost of the expert's appointment. [source] ECONOMIC VALUATION OF RIPARIAN BUFFER AND OPEN SPACE IN A SUBURBAN WATERSHED1JOURNAL OF THE AMERICAN WATER RESOURCES ASSOCIATION, Issue 6 2006Zeyuan Qiu Abstract: This study evaluates the economic value of riparian buffers and open space in a suburban watershed through two nonmarket valuation methods. A contingent valuation survey was implemented in the Dardenne Creek watershed, a suburban watershed of the St. Louis metropolitan area in Missouri, to evaluate the residents' perceptions of and willingness to pay (WTP) for adopting riparian buffers and preserving farmland in a hypothetical real estate market. A hedonic pricing model based on actual sale prices of homes in the watershed was applied to estimate the market value of open space and other environmental conditions such as flood zone and stream proximity in the study area. The results showed that residents' WTP was consistent with the economic values of open space and proximity to streams embedded in existing home prices. Through a better understanding of residents' perceptions and values, riparian buffer and open space programs can be designed and promoted to achieve greater implementation success and environmental benefit. [source] OPTIMAL MULTIPLE STOPPING AND VALUATION OF SWING OPTIONSMATHEMATICAL FINANCE, Issue 2 2008René Carmona The connection between optimal stopping of random systems and the theory of the Snell envelop is well understood, and its application to the pricing of American contingent claims is well known. Motivated by the pricing of swing contracts (whose recall components can be viewed as contingent claims with multiple exercises of American type) we investigate the mathematical generalization of these results to the case of possible multiple stopping. We prove existence of the multiple exercise policies in a fairly general set-up. We then concentrate on the Black,Scholes model for which we give a constructive solution in the perpetual case, and an approximation procedure in the finite horizon case. The last two sections of the paper are devoted to numerical results. We illustrate the theoretical results of the perpetual case, and in the finite horizon case, we introduce numerical approximation algorithms based on ideas of the Malliavin calculus. [source] STOCK MARKET VALUATIONS OF R&D AND ELECTRONICS FIRMS DURING TAIWAN'S RECENT ECONOMIC TRANSITIONTHE DEVELOPING ECONOMIES, Issue 1 2006CHAOSHIN CHIAO G12; O33 The objective of the present study is to investigate the market valuation of Research and Development (R&D) investments in the Taiwanese stock market from July 1988 to June 2002. The motivation stems from Taiwan's recent economic transition from a labor-intensive, then to a capital-intensive, and currently to a technology-based economy. The results support not only the existence, but also the persistence of R&D-associated mispricing. More importantly, it has become stronger as the electronics industry gradually dominates the economy. First, R&D-intensive stocks tend to outperform stocks with little or no R&D. Second, the R&D-intensity effect cannot fully be attributed to firm size. Third, the R&D-intensity effect is more pronounced for firms in the electronics industry after 1996. [source] LEARNING, EXTERNALITIES, AND THE SALE OF INVENTIONS TO FIRMS WITH CORRELATED VALUATIONSAUSTRALIAN ECONOMIC PAPERS, Issue 4 2004JOHN T. KING I examine how an inventor's ability to learn affects the bargaining outcome when she attempts to sell a discovery to one of two oligopolistically competitive firms with correlated and private valuations. It is shown that learning gives the inventor an incentive to lower her proposed price to the first firm approached since being rejected would cause her to be pessimistic when dealing with the second firm. At the same time, however, the inventor would like to raise her proposed price since this pessimism is weaker if she is rejected upon making a high proposal. Another incentive to raise the proposal comes from the fact that learning increases the first firm's willingness to pay for the invention. Computational results suggest that the first effect dominates and thus the inventor lowers her proposal in the first round. When dealing with the second firm, it is shown that learning results in a lower equilibrium proposal and contracting with more types. Moreover, it is shown that the cost of lowering the proposed price outweighs the benefit of contracting with more types so that learning in general reduces the continuation value associated with contracting in the second round. [source] Shared Services Transformation: Conceptualization and Valuation from the Perspective of Real OptionsDECISION SCIENCES, Issue 3 2009Ning Su ABSTRACT In today's volatile global economy, where many organizations face severe pressure to downsize, the "shared services" model, in which a firm merges common functions performed by multiple units into a single service delivery organization, provides an innovative approach to make business more efficient and effective. To successfully implement shared services, firms need to strategically decide whether and how to pursue various service transformation alternatives such as simplification, standardization, consolidation, insourcing, or outsourcing. In this study, we develop the notion of real options into a unique theoretical lens for conceptualizing service organizations and their transformation in an uncertain business environment. Specifically, we view service organization as a set of strategic options that give the firm preferential access to future transformation opportunities. We create a taxonomy of these options, and introduce a decision methodology for valuing alternative shared services transformation approaches. We illustrate this methodology by applying it in a real business case to justify a global firm's decision regarding the transformation of its finance organization. [source] Venture Capital Financial Contracting and the Valuation of High Technology Firms.ECONOMICA, Issue 293 2007Edited by JOSEPH A. McCAHERY, LUC RENNEBOOG No abstract is available for this article. [source] Capital Cash Flows, APV and ValuationEUROPEAN FINANCIAL MANAGEMENT, Issue 1 2007Laurence Booth G31; G32 Abstract This paper examines three different methods of valuing companies and projects: the adjusted present value (APV), capital cash flows (CCF) and weighted average cost of capital (WACC) methods. It develops the appropriate WACC and beta leveraging formulae appropriate for each valuation model, so that given a particular valuation model the correct APV and CCF values can be determined from the WACC value and vice versa. Further it goes on to show when the perpetuity formulae give poor estimates of the value of individual cash flows, even though the overall values are correct. The paper cautions that the APV and CCF models require more information than is currently known, such as the value of the corporate use of debt, and consequently can give misleading results, particularly in sensitivity analyses. [source] The Impact of Fundamentals on IPO ValuationFINANCIAL MANAGEMENT, Issue 2 2009Rajesh Aggarwal We examine how initial public offering (IPO) valuation has changed over time by focusing on three time periods: 1986-1990, January 1997 to March 2000 (designated as the boom period), and April 2000 to December 2001 (designated as the crash period). Using a sample of 1,655 IPOs, we find that firms with more negative earnings have higher valuations than do firms with less negative earnings and firms with more positive earnings have higher valuations than firms with less positive earnings. Our results suggest that negative earnings are a proxy for growth opportunities for Internet firms and that such growth options are a significant component of IPO firm value. [source] Earnings and Equity Valuation in the Biotech Industry: Theory and EvidenceFINANCIAL MANAGEMENT, Issue 3 2008Philip Joos We examine how the price-earnings relation varies with the uncertainty about and the quality of a firm's investments. We develop a real option valuation framework to capture investment and abandonment options in the research-intensive biotechnology industry. We hypothesize that the price-earnings relation will be V-shaped and change over the firm's life cycle. We also show how nonfinancial information affects the pricing of earnings. Our empirical findings are based on a sample of 301 biotechnology firms that made IPOs between 1980 and 2000, and are generally consistent with our predictions. [source] A Required Yield Theory of Stock Market Valuation and Treasury Yield DeterminationFINANCIAL MARKETS, INSTITUTIONS & INSTRUMENTS, Issue 1 2009Christophe Faugère Stock market valuation and Treasury yield determination are consistent with the Fisher effect (1896) as generalized by Darby (1975) and Feldstein (1976). The U.S. stock market (S&P 500) is priced to yield ex-ante a real after-tax return directly related to real long-term GDP/capita growth (the required yield). Elements of our theory show that: (1) real after-tax Treasury and S&P 500 forward earnings yields are stationary processes around positive means; (2) the stock market is indeed priced as the present value of expected dividends with the proviso that investors are expecting fast mean reversion of the S&P 500 nominal growth opportunities to zero. Moreover, (3) the equity premium is mostly due to business cycle risk and is a direct function of below trend expected productivity, where productivity is measured by the growth in book value of S&P 500 equity per-share. Inflation and fear-based risk premia only have a secondary impact on the premium. The premium is always positive or zero with respect to long-term Treasuries. It may be negative for short-term Treasuries when short-term productivity outpaces medium and long run trends. Consequently: (4) Treasury yields are mostly determined in reference to the required yield and the business cycle risk premium; (5) the yield spread is largely explained by the differential of long-term book value per share growth vs. near term growth, with possible yield curve inversions. Finally, (6) the Fed model is partially validated since both the S&P 500 forward earnings yield and the ten-year Treasury yield are determined by a common factor: the required yield. [source] Arbitrage, Liquidity, and the Valuation of Exchange Traded FundsFINANCIAL MARKETS, INSTITUTIONS & INSTRUMENTS, Issue 5 2008Lucy F. Ackert This paper investigates the performance of U.S. and country exchange traded funds currently traded in the United States and provides new insight into their pricing. While the U.S. funds are priced closely to their net asset values, the country funds are not and can exhibit large, positive autocorrelations in fund premium. The mispricing of country funds is related to momentum, illiquidity, and size effects. We also find an inverted U-shaped relationship between fund premium and market liquidity, which suggests that more active trading does lead to lower mispricing but only after a certain level of liquidity is reached. [source] Environmental Valuation: Interregional and Intraregional Perspectives , Edited by John I. Carruthers and Bill MundyGROWTH AND CHANGE, Issue 1 2008Morgan Robertson No abstract is available for this article. [source] Valuation-based accounting research: Implications for financial reporting and opportunities for future researchACCOUNTING & FINANCE, Issue 1 2000Mary E. Barth This paper discusses the relation between financial reporting research and practice, particularly standard setters. Many studies addressing financial reporting issues use a valuation approach. The paper describes alternative approaches to valuation research and summarises the findings relating to four major current issues: fair value accounting for financial, tangible, and intangible assets, cash flows versus accruals, recognition versus disclosure, and international harmonisation of accounting standards. The summaries include identifying what standard setters and others would like to learn from research, what we have learned, and what is left to learn. The paper concludes with observations about future financial reporting academic research. [source] Valuation of ecological resources: integration of ecology and socioeconomics in environmental decision making edited by Ralph G. Stahl, Jr., Lawrence A. Kapustka, Wayne R. Munns, Jr., and Randall J.F. BruinsINTEGRATED ENVIRONMENTAL ASSESSMENT AND MANAGEMENT, Issue 3 2009Matthew T. Heberling No abstract is available for this article. [source] Valuation of biodiversity effects from reduced pesticide useINTEGRATED ENVIRONMENTAL ASSESSMENT AND MANAGEMENT, Issue 2 2006Jesper S. Schou Abstract This study deals with the effects on biodiversity of pesticide-free buffer zones along field margins. Using choice modeling, the majority of respondents to a survey on pesticide use in the environment are willing to accept an increase in the price of bread if the survival of partridge chicks and the number of wild plants increase. The study identifies the need for further empirical work with respect to methodological validation, price estimation, and the use of survey results in policy analysis. In particular, the environmental effects of pesticide use are complex and, therefore, present difficult challenges when presenting information to lay people. Forty-one percent of respondents changed their responses regarding willingness to pay more for bread when references to pesticide use were introduced in the questionnaire. This indicates that scenarios depicting changes in pesticide use can be difficult to present to lay people in an economically rational and well-defined context. Thus, in the study of valuation related to changes in pesticide use, much attention should be devoted to the design and definition of the context. Furthermore, the effects of providing different background information, e.g., with or without the mention of pesticides, should be tested. [source] Market Valuation of Research and Development Spending under Canadian GAAP,ACCOUNTING PERSPECTIVES, Issue 1 2004ANTONELLO CALLIMACI ABSTRACT Section 3450 of the Canadian Institute of Chartered Accountants (CICA) Handbook requires Canadian firms to capitalize development costs that meet certain criteria and to expense those that relate to research. International Accounting Standard (IAS) No. 38 favours a similar approach. In the United States, Statement of Financial Accounting Standard (SFAS) No. 2 recommends the immediate expensing of all research and development (R&D) spending. The only exception is SFAS No. 86, which requires software development costs to be capitalized when a product successfully passes a technological feasibility test. Consequently, the Canadian financial disclosure regime provides a rich setting for testing the market valuation of capitalized R&D. Our primary research question asks whether capitalized R&D provides useful information to market participants investing in Canadian firms. We use price-level and return models to assess the value relevance of capitalized R&D disclosed in the financial statements under Canadian GAAP. In line with expectations, using a price-level model, we find that capitalized R&D and R&D expense as disclosed in the financial statements provide information that is value relevant to market participants. However, we find that R&D capitalized during the year helps explain returns while R&D expense does not. Thus we conclude that the application of section 3450 of the CICA Handbook produces value-relevant information. [source] Personal Taxation in Firm Market Valuation: Theory and Test,ACCOUNTING PERSPECTIVES, Issue 1 2002ZENG TAO ABSTRACT In this paper, I extend Ohlson's 1995 firm market valuation model to incorporate personal taxes: the taxes on dividends and the taxes on capital gains. Without personal taxes, firm market value can be expressed as the present value of future benefits received by the shareholders (dividends, in this case). With personal taxes, the benefits received by the shareholders should be classified into three categories (due to their different tax treatments): dividends, share repurchases, and new share issues (i.e., contributed capital). The extended model shows the effects of personal taxation on firm market valuation: retained earnings are valued less than contributed stocks, both dividends taxes and capital gains taxes affect retained earnings valuation and firm market value, and firms choose cash distribution methods (paying dividends and repurchasing shares) to increase their retained earnings valuation, therefore increasing their market value. An empirical test using a sample from the Disclosure Select Canada and Financial Post Card data bases for the years 1995-98 supports these personal tax effects. [source] Valuation of health states in the US study to establish disability weights: lessons from the literatureINTERNATIONAL JOURNAL OF METHODS IN PSYCHIATRIC RESEARCH, Issue 1 2010Jürgen Rehm Abstract The metric of disability-adjusted life years (DALYs) has become the global standard of measuring burden of disease. DALYs are comprised of years of life lost due to premature mortality and years of healthy life lost due to living with disability. In order to calculate the second part of the DALY equation, disease specific disability weights have to be established, i.e. measures for the decline of health associated with these disease states, which vary between zero for perfect health and one for death. Although these disability weights are key for estimating DALYs, there have not been many comprehensive studies with empirical determinations of them. This article describes a systematic review on the state of the art with respect to empirically determining disability weights. Based on this review, a multi-method approach is outlined, which has also been implemented in a US study to measure burden of disease. This approach involves the use of psychometric methodology as well as economic trade-off methods for determining the value of health states. It is conceptualized as a disaggregated approach, where the disability weight of any health state can be calculated if the attributes of this health state are known. The US study received the collaboration of experts from more than 20 institutes of the National Institutes of Health and of the Centers for Disease Control and Prevention. First results will be available by the end of this year. Copyright © 2010 John Wiley & Sons, Ltd. [source] Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10,Q FilingsJOURNAL OF ACCOUNTING RESEARCH, Issue 4 2002Steven Balsam The release of the full set of financial statements in Form 10,Q provides investors with the data necessary to estimate the discretionary portion of earnings, thereby allowing them to better assess the integrity of reported quarterly earnings. We thus expect a negative association between unexpected discretionary accruals estimated using 10,Q disclosures and stock returns around 10,Q filing dates. Consistent with our expectations, we document a negative association between unexpected discretionary accruals and cumulative abnormal returns over a short window around the 10,Q filing date. Furthermore, this association varies systematically with investor sophistication. Finally, results from portfolio tests indicate that this association is economically as well as statistically significant. One interpretation of our findings is that accruals management has substantial valuation consequences, which are quickly impounded into stock prices. [source] Incentives, Discretion, and Asset Valuation in Closed,End Mutual FundsJOURNAL OF ACCOUNTING RESEARCH, Issue 4 2002Nandini Chandar This paper studies earnings management using 363 closed,end mutual fund firm,years of data. Closed,end fund assets consist of unrestricted and restricted securities, and realized and unrealized income. While unrestricted securities are not subject to earnings management, restricted security values are largely discretionary. Managerial valuation of restricted securities is modeled as contingent on unrestricted returns relative to a performance benchmark. Four unrestricted performance regions are identified. Known multi,period compensation incentives become the basis for hypothesizing earnings management behaviors in the regions in the form of restricted security valuation. Across several benchmarks, the results are consistent with multi,period maximization rather than simpler single,period compensation maximization or income smoothing. Funds with extreme unrestricted performance show relatively larger income,decreasing earnings management, and funds with slightly,below benchmark returns show relatively larger income,increasing earnings management than those slightly above. These results clarify the relationship between complex earnings management behavior and managerial incentives. [source] Decomposing the Value of Agricultural Multifunctionality: Combining Contingent Valuation and the Analytical Hierarchy ProcessJOURNAL OF AGRICULTURAL ECONOMICS, Issue 2 2007Zein Kallas Q18; Q11; Q25 Abstract Agricultural multifunctionality is the recognition of the joint exercise of economic, environmental and social functions by this sector. Nevertheless, not all these contributions to society are valued in markets, moreover a large share of them are public goods. For this reason, in order to make this concept of multifunctionality operative for the design of public policies, it is necessary to estimate the social demand of such functions. The objective of this article was to implement an empirical application along these lines. For this purpose, the agricultural system of cereal steppes in Tierra de Campos in Spain is taken as a case study. The economic valuation technique used relies on a combined implementation of contingent valuation and the analytical hierarchy process. The results obtained demonstrate the existence of a significant demand for the different attributes included in the multifunctionality concept, although this demand is heterogeneous and is based on the socioeconomic characteristics of individual persons. [source] Stock Market Valuation, Profitability and R&D Spending of the Firm: The Effect of Technology Mergers and AcquisitionsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2009Juha-Pekka Kallunki Abstract:, In this paper, we investigate whether a firm can enhance the effect of its R&D spending on its current market value and future profitability through technology-oriented M&As. On the basis of an analysis of 1,879 M&As, we find that when a technology firm acquires another technology firm, the magnitude of the stock price response to the R&D spending of an acquirer increases by 107% in the year of the M&A. In contrast, we find no such increase in the stock price response to the R&D spending of a non-technology acquirer. We also find that technology acquirers are more successful in converting their R&D spending into positive future profitability than non-technology acquirers. Our results are robust for different alternative specifications of our model and when various firm differences are controlled for. [source] Implications of Components of Income Excluded from Pro Forma Earnings for Future Profitability and Equity ValuationJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2007Wayne R. Landsman Abstract:, This study addresses three research questions relating to total exclusions, special items, and other exclusions. Are each of these pro forma exclusion components forecasting irrelevant? Are each of the exclusion components value irrelevant? Are the valuation multiples on the exclusion components justified by their ability to forecast future profitability as predicted by the Ohlson (1999) model? Findings are generally consistent with the market-inefficiency results presented in Doyle et al. (2003). Total exclusions are valued negatively by the market despite the prediction that total exclusions will be valued positively. Valuation results also suggest that stocks with positive other exclusions are overpriced. [source] Market Valuation of Successful versus Non-successful R&D Efforts in the Pharmaceutical IndustryJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2004Rebecca Toppe Shortridge Abstract: This paper examines the relationship between a non-financial measure of successful research and development (R&D) efforts in the pharmaceutical industry and R&D expenditures. I hypothesize that the R&D of successful producers will be valued more by the market than the R&D of non-successful producers. The regression results support the hypothesis. In the primary model, R&D is not associated with price; however, the coefficient on the interaction between R&D and successful developers is positively related to stock price. This implies that the market values the R&D expenditures of successful developers but not the expenditures of less-successful developers. [source] Deflators, Net Shareholder Cash Flows, Dividends, Capital Contributions and Estimated Models of Corporate ValuationJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2003Saeed Akbar First page of article [source] An Aggregation Theorem for the Valuation of Equity Under Linear Information DynamicsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2003David Ashton We state an Aggregation Theorem which shows that the recursion value of equity is functionally proportional to its adaptation value. Since the recursion value of equity is equal to its book value plus the expected present value of its abnormal earnings, it follows that the adaptation value of equity can normally be determined by a process of simple quadrature. We demonstrate the application of the Aggregation Theorem using two stochastic processes. The first uses the linear information dynamics of the Ohlson (1995) model. The second uses linear information dynamics based on the Cox, Ingersoll and Ross (1985),square root' process. Both these processes lead to closed form expressions for the adaptation and overall market value of equity. There are, however, many other processes which are compatible with the Aggregation Theorem. These all show that the market value of equity will be a highly convex function of its recursion value. The empirical evidence we report for UK companies largely supports the convexity hypothesis. [source] Valuation and Cost of Capital Formulae with Corporate and Personal Taxes: A Synthesis Using the Dempsey Discounted Dividends ModelJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2001Mike Dempsey This paper advances expressions for the firm's valuation and cost of capital as a function of leverage. The framework is arrived at by introducing leverage in Dempsey's (1996 and 1998) cost of capital framework and is applicable in the context of both classical and imputation tax systems. The framework reveals that both the historical stability of corporate leverage and the firm's choice of financing structure as revealed by the Pecking Order hypothesis are consistent with a tax-based explanation. [source] Valuing groundwater recharge through agricultural production in the Hadejia-Nguru wetlands in northern NigeriaAGRICULTURAL ECONOMICS, Issue 3 2000Gayatri Acharya Production function approach; Valuation; Wetlands; Groundwater recharge; Ecosystem function Abstract This study applies a production function approach to value the groundwater recharge function of the Hadejia-Nguru wetlands in northern Nigeria. The groundwater recharge function supports dry season agricultural production which is dependent on groundwater abstraction for irrigation. Using survey data this paper first carries out an economic valuation of agricultural production, per hectare of irrigated land. We then value the recharge function as an environmental input into the dry season agricultural production and derive appropriate welfare change measures. Welfare change is calculated using the estimated production functions and hypothetical changes in groundwater recharge and hence, groundwater levels. By focusing on agricultural production dependent solely on groundwater resources from the shallow aquifer, this study establishes that the groundwater recharge function of the wetlands is of significant importance for the floodplain. [source] Where Corporate Governance and Financial Analysts Affect ValuationJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 3 2009Ran R. Barniv We examine whether corporate governance and financial analysts affect accounting-based valuation models for B and H shares traded by foreign investors in China and Hong Kong, respectively. We expect that better corporate governance and more effective analyst activity mitigate potential adverse effects on accounting valuation models generated by country-specific problems in accounting, auditing, and legal systems. We find that valuation models perform better for companies with a greater analyst following, smaller forecast errors, relatively high public ownership and a strong board structure. Valuation models and accounting numbers have only limited explanatory power and valuation role for companies with weak governance and less effective analyst performance. The findings are robust across various market value, return, unexpected return, and other accounting valuation models. The results are consistent with less informed foreign investor clienteles searching for signals of more effective analyst activity and better corporate governance mechanisms. [source] | ||||||||||||||||||||||||||||||||||||||||||||||