Last week’s lively telephone conference on “Quantification of Company-Specific Risk: Theory and Applications” sparked over a dozen questions for presenters Keith Pinkerton and Peter Butler, on everything from applying the new technique to small businesses (where there may be no readily available guideline companies) to companies based or doing business in foreign markets.  

“What article (or articles) would you recommend for review on the ‘Total Beta’ concept?” asked one listener, referring to a key premise of the Pinkerton/Butler framework. Answer: Investment Valuation (2nd Ed., Wiley 2002), by noted NYU scholar Aswath Damadoran, in particular Chapter 24, “Valuing Private Firms.”  Professor Damodaran, who generously contributed his input to the conference, also references the total beta concept on his website, where many of his books and papers—including Investment Valuation—are made freely available.

“Professor Damodaran introduced the total beta concept in 2002, and to the best of our knowledge we have not seen any criticisms of it five years later,” say the presenters.  “But if anyone is familiar with criticisms, please contact us,” or the BVWire editor.

Look for their complete QnA in the May 2007 issue of the BVU.  For a CD or transcript of the telephone conference, click here.