That’s the title of a new paper from Pablo Fernandez, a professor in the department of financial management at the University of Navarra—IESE Business School in Spain.
The hits keep coming to the existence of the size effect.
Some appraisers believe that the size effect has diminished or disappeared since it was first documented in 1981.
A new international industry benchmarking module will be available in late October for the Duff & Phelps Cost of Capital Navigator.
Which financial market and economic indicators did Duff & Phelps take into consideration when it arrives at its recommended U.S. equity risk premium and accompanying normalized risk-free rate?
The authors demonstrate how a high-yield option-adjusted spread is used when doing appraisals of private companies while considering the market volatility and economic slowdown caused by the COVID-19 pandemic.
Duff & Phelps has decreased its recommended U.S. normalized risk-free rate from 3.0% to 2.5% for use as of June 30, 2020, according to a client alert.
Adding a size premium to the cost of equity could make an expert’s testimony subject to a Daubert challenge, says Clifford Ang (Compass Lexicon) in a recent article.
Most business valuers consider a size premium when calculating cost of capital for financial reporting purposes.
Pablo Fernandez continues to release research that may assist UK business valuers working on reports with valuation dates in Q1 2020.
Some appraisers feel that using public market data when estimating the cost of capital for a private company requires too many assumptions and adjustments to convert data from actively traded stocks into proxies for private-company valuation.
A special edition (fifth) of the “European Capital Market Study” from ValueTrust was released last week.
D&P has increased its recommended U.S. equity risk premium (ERP) from 5.0% to 6.0% for use as of 25 March 2020.
Duff & Phelps has increased its recommended U.S. equity risk premium (ERP) from 5.0% to 6.0% for use as of March 25, 2020, according to a client alert.
Pablo Fernandez, professor of finance at the IESE Business School, is surveying business valuation professionals in the UK to determine what cost of equity assumptions they are using for 2020.
Year-end 2019 data are now available in BVR’s Cost of Capital Professional.
Year-end 2019 data, including risk-free rates, industry risk premia, equity risk premia, and size premia, are now available in BVR’s Cost of Capital Professional platform.
Professor Aswath Damodaran (New York University Stern School of Business) has done his annual posting of data updates on his website that include risk-free rates, equity risk premiums, corporate default spreads, corporate tax rates, country risk premiums, and other data.
Pablo Fernandez, the professor of finance at IESE Business School, remains one of the most thoughtful observers of business valuation practices.
In theory, clarification and stabilisation make markets happy, so the current road map to exit should encourage investors.
A new paper presents a real valuation a well-known investment bank performed using two usual methods that are supposed to provide the same value.
January 2020 Hardcover, PDF
Business Valuation Resources, LLC
There have been many studies on the size premium but with conflicting results. Now, the first “meta-analysis” of the size premium provides an estimate that is smaller than what many people believe, according to a new paper.
A veteran appraiser presents an interesting retrospective on the cost of capital and offers some observations on current practice.
KPMG Germany collected WACC results from 312 companies in Germany, Austria, and Switzerland for its 14th edition of the ‘Cost of Capital Study,’ concluding that the average WACC across industries remains at 6.9%.