Larger listed companies barely outperform smaller ones now, a new study argues
Published research has overstated the size premium, says ‘Firm Size and Stock Returns: A Quantitative Survey,’ a new analysis conducted by Anton Astakhov, Tomas Havranek, and Jiri Novak from the Institute of Economic Studies at Charles University in Prague.
New meta-analysis study finds diminished size premium in stock returns
The debate over the size premium in stock returns has raged for years, with no consensus over the magnitude or stability—or even the existence—of the size premium. There have been many studies on the size premium but with conflicting results.
How should business valuers measure country risk when revenues originate outside of the UK?
Aswath Damodaran (New York University Stern School of Business) continues to provide country risk comparisons on his website.
Is Your Cost of Capital Data Backing You Into a Corner?
In a recent court case, the valuation expert tried to use professional judgment but the data being used did not support her opinion. The expert could not adequately explain why she chose not to go where the data led her.
First-ever face-off of cost of capital platforms
BVR’s Cost of Capital Professional and the Duff & Phelps Cost of Capital Navigator went head-to-head for the first time, headlining the annual two-day conference of the Virginia Society of CPAs.
Concerns Over Data Security in Online Cost of Capital Tools
Business Valuation Update attended the recent NYSSCPA business valuation conference in New York City where several attendees expressed concerns about entering sensitive client data into online tools for estimating the cost of capital. The providers of the Duff & Phelps Cost of Capital Navigator and BVR’s Cost of Capital Professional respond to these concerns.
BVU News and Trends August 2019
monthly roundup of key developments of interest to business valuation experts.
Survey: Most appraisers look backwards for ERPs
The historical approach (ex post) is the preferred approach in estimating the equity risk premium (ERP), according to 76% of respondents to our latest survey.
Cost of capital platforms topline Virginia conference September 19-20
BVWire will be heading to Glen Allen, Va., for the Business Valuation, Fraud & Litigation Services Conference on September 19-20, sponsored by the Virginia Society of CPAs.
Ex post approach for ERP favored in early survey results
Our latest minisurvey on the cost of capital reveals that the historical approach (ex post) is the preferred approach in estimating the equity risk premium (ERP), cited by 75% of respondents.
Trial offer for BVR’s online cost of capital tool
If you haven’t checked out BVR’s new Cost of Capital Professional, now’s the time to do it.
Which ERP camp are you in? Please take our survey.
When you drive your car, should you look through your windshield or the rearview mirror?
BVU News and Trends September 2019
A monthly roundup of key developments of interest to business valuation experts.
20- and 10-year spot yields on T-bonds favored for risk-free rate
Two-thirds of survey respondents say they use the spot yield on Treasury bonds for their risk-free rate when developing an estimate for the cost of capital, according to BVWire’s latest survey.
Early survey results on risk-free rates of choice
Preliminary results from our latest cost of capital survey reveal that the spot yield on the 20-year U.S. Treasury bond is most often used as the basis for the risk-free rate.
Part 2 of our cost of capital survey: risk-free rates
Please take part in the second in our series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.
Interesting results from our cost of capital survey
A significant number of valuation experts look to the private capital markets when estimating the cost of capital for a private firm, according to a BVWire survey.
Should business valuators use ‘implied’ equity risk premiums? Damodaran says yes
The free, 11th annual update to ‘Equity Risk Premiums (ERP): Determinants, Estimation and Implications—The 2019 Edition’ is now available from Professor Aswath Damodaran (New York University Stern School of Business).
‘We’re killing ourselves!’ with cost of capital complexity
That was the cry of one attendee at the NACVA conference in Salt Lake City during a session titled “The Cost of Capital Conundrum.”
Reminder: Take our cost of capital survey
Our thanks to those of you who took the first in a series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.
Damodaran posts 2019 edition of ERP paper
The “dean of valuation,” Professor Aswath Damodaran (New York University Stern School of Business) has posted “Equity Risk Premiums (ERP): Determinants, Estimation and Implications—The 2019 Edition.”
Participate in BVWire’s cost of capital surveys
BVWire is a conducting a series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.
Industry betas now included in CCPro platform
Users of BVR’s new Cost of Capital Professional (CCPro) platform now have the choice of two sources of industry betas to help in estimating the industry risk premium (IRP) component of the buildup method for developing the cost of capital for a private company.
Two Articles Addressing Firm Quality and Its Impact on the Size Effect
The authors discuss two recent papers that present the concept of firms’ quality and show that it plays an important role in understanding the size effect. Also discussed are papers that present a differing view.
No End in Sight to Size Effect Debate
A look at several recent articles on the so-called size premium that perpetuate the debate on this topic. Some appraisers feel that the size effect has diminished or disappeared since it was first documented in 1981, while others feel it is alive and well.