New paper finds scant evidence of a size effect
“The bottom line is that after addressing the facts and fictions of the size effect, we find neither strong empirical evidence nor robust theoretical support for a prominent size premium.”
FAQs posted for new cost of capital platform
A set of FAQs for BVR’s Cost of Capital Professional (CCP) has been added to the webpage that explains the new independent service for estimating the cost of equity.
Board of advisors shapes up for BVR’s new cost of capital platform
Experts from the who’s who of the business valuation world have joined the advisory board for BVR’s Cost of Capital Professional (CCP), the new independent service for estimating the cost of equity.
Cost of Capital Professional
BVR to Launch New Platform for Estimating the Cost of Capital
The time is right for a simple, independent service to augment each appraiser’s own professional judgment and his or her other research when estimating the cost of capital. A free trial period begins in November, and feedback is requested.
BVR christens new platform for estimating the cost of capital
The Cost of Capital Professional is the name chosen for BVR’s new, simple, independent service for estimating the cost of equity.
BVR to launch new platform for estimating the cost of capital
Business valuation experts will soon have an additional option for estimating the cost of equity.
The Absence of a Size Effect Relevant to the Cost of Equity
In this paper, I evaluate whether there is a size effect that is relevant to the cost of equity. I first analyze what model investors use to determine the required rate of return on their investment and find investors prefer the Capital Asset Pricing Model (CAPM) over other models, even those that include a size proxy. I also show that over the period 1981 to 2016, small stocks underperformed large stocks, which is inconsistent with ...
The Size Effect Continues To Be Relevant When Estimating the Cost of Capital
In this paper, I will review the size effect, potential reasons why one observes the size effect, and correct common misconceptions and address criticisms of the Size Premia (SP). Specifically, we demonstrate that the size premium critique by Cliff Ang is not warranted and that the alternative methodology proposed by that author is misleading and cannot be considered as an alternative to the Duff & Phelps’ SP. Subsequently, we will highlight some methodological issues with ...
The effect of shareholder lawsuits on cost of equity
A firm may see adjustments to its cost of equity capital either at the time a shareholder lawsuit is filed or when the outcome of the lawsuit is determined—or both—says a new paper by William J. Moser (Miami University).
Impact of Tax Cuts and Jobs Act on Valuation: Six-Month Review (A Web Workshop)
The Tax Cuts and Jobs Act (TCJA) was the biggest change to tax law in over 30 years, containing provisions related to individual and business taxation. Six months in, it is time to digest and discuss the impacts for valuation professionals. This expert-led panel includes Stacey Udell, Michelle Gallagher, Michael Morhaus, and Kevin Yeanoplos and will be sure to deliver an eye-opening discussion about key aspects of the TCJA and how it impacts your engagements.
Private firms lowball their cost of equity
Surprisingly, over half (54%) of privately held business owners believe their cost of equity is less than or equal to 12%, according to the “2018 Private Capital Markets Report” from Pepperdine University Graziadio School of Business and Management.
CFOs surveyed on ERP
In a new paper, John R. Graham and Campbell R. Harvey of Duke University analyze the history of the equity risk premium from surveys of U.S. chief financial officers (CFOs) conducted every quarter from June 2000 to December 2017.
Private firm valuations surge, per Pepperdine report
Business valuations have been significantly increasing, according to new results from the “2018 Private Capital Markets Project” from Pepperdine Graziadio Business School.
D&P answers (more) questions on the Navigator
Duff & Phelps did a fine job fielding another barrage of probing questions about its new Cost of Capital Navigator during a free webinar (watch a replay here).
Should appraisers be guessing on company-specific risk?
Of all the components that make up the cost of equity (COE), the company-specific risk premium (CSRP) often has the biggest impact on your discount rate. And, while appraisers rely on hard data for all of the other inputs in the COE, the CSRP is more or less a guess—which can send your business valuation off course. Check out BVR's infographic.
Duff & Phelps Cost of Capital Navigator: Q&A With Jim Harrington
The Duff & Phelps Cost of Capital Navigator is now available. The new online application is designed to assist financial professionals to calculate and strengthen their cost of capital estimates. The Cost of Capital Navigator provides step-by-step guidance for developing U.S. cost of capital estimates in a straightforward, no-nonsense fashion, using multiple methodologies, and then layering in contextual industry data that can benchmark, augment, and support the estimates.
Free webinar on Cost of Capital Navigator Q&As
The huge audience at our webinar on the Duff & Phelps Cost of Capital Navigator had so many good questions that we ran out of time, so there will be a free webinar on March 29 with Jim Harrington of D&P.
The New Duff & Phelps Cost of Capital Navigator—(Some of) Your Questions Answered!
Responses to audience questions during the first public demo of the Duff & Phelps online Cost of Capital Navigator, which will replace the print versions of the Valuation Handbook series.
Depreciation and Amortization in DCF Analyses and the Impact of the New Tax Law
Do you know how the 2018 Tax Cuts and Jobs Act will impact your financial projections and DCF calculations? Establish a foundation on the key components of cash-flow projections used in discounted cash flow analyses. Join expert Gilbert Matthews for an examination of the often-misunderstood relationship between capital expenditures and depreciation and the appropriate treatment of limited life items such as amortization in DCF analyses. Learn how changes in the corporate tax rate and capital ...
SECBA gets sneak preview of the D&P Cost of Capital Navigator
The hardcover version of the Duff & Phelps Valuation Handbook – U.S. Guide to Cost of Capital will no longer be published—it is being replaced by the Duff & Phelps Cost of Capital Navigator, an interactive online application.
Business Valuation Update Yearbook, 2018 Edition
February 2018 PDF
BVR (editor)
Business Valuation Resources, LLC
Duff & Phelps Cost of Capital Navigator—Sneak Preview
The initial rollout of the Cost of Capital Navigator in February 2018 features the data, methodology, text, and examples from the Valuation Handbook – U.S. Guide to Cost of Capital and will be demonstrated by James Harrington. Later in 2018, the expansive data and information from the other three Duff & Phelps “Valuation Handbooks” will be added to the Cost of Capital Navigator: (i) U.S. industry data from the Valuation Handbook – U.S. Industry to ...
The Essentials of CAPM Beta
Betas are misunderstood, misapplied, and, often, feared. A key feature of the CAPM is “beta” that represents an asset’s exposure to market risk. Practitioners using the CAPM or its modified form must determine a beta value to apply the model for cost of capital calculations. Join Dr. Michael Crain and Dr. Bill Kennedy for an exploration of the theory and evidence of CAPM beta, use of beta in valuation practice, and the link between capital ...
International Case Studies Using the Duff & Phelps Valuation Handbooks: Practical Application of the Valuation Profession's Most Relied Upon Cost of Capital Resource (Day 2—FREE Webinar)
A supportable cost of capital estimate is a key ingredient in estimating the value of a business. The Duff & Phelps Valuation Handbook series is at the forefront in providing the cost of capital inputs (equity risk premia, size premia, industry risk premia, risk-free rates, country risk premia, etc.) that are used to develop cost of capital estimates, both in the United States and internationally. Join the Duff & Phelps team that produces the Valuation ...