Research paper finds the size premium mostly nonexistent
“Investors require no premium to hold small stocks over big stocks in normal times,” says a recently updated paper on the size premium.
Spend more time on the numerator, expert panel advises
Attendees at a recent online workshop were urged to spend more time on the numerator (forecasts) of the valuation equation rather than the denominator (cost of capital).
Global BV News: KPMG Germany releases 2019 cost of capital study
Subtitled “The Calm Before the Storm—Rising Profits and Deflated Values?” the 14th edition of the Cost of Capital Study from KPMG Germany examines, among other things, the impact of regulatory interventions, scarcity of resources as well as digitalization on business models, their performance (cash flows) and their risk (cost of capital) by industry sector.
BVR and Duff & Phelps Cost of Capital Platforms Go Head-to-Head at VSCPA
Both platforms give similar results when estimating the cost of capital for private firms. They were put through their paces at a recent conference presented by the Virginia Society of CPAs.
A simple look at betas—and other inputs to the income approach
When estimating a company’s cost of equity, we all know investors adjust for varying levels of risk.
D&P lowers its normalized risk-free rate to 3.0%
Duff & Phelps has decreased its U.S. normalized risk-free rate from 3.5% to 3.0% effective 30 September 2019, the firm says in a statement.
BVU News and Trends October 2019
A monthly roundup of key developments of interest to business valuation experts.
D&P lowers its normalized risk-free rate to 3.0%
Duff & Phelps has decreased its U.S. normalized risk-free rate from 3.5% to 3.0% effective Sept. 30, 2019, the firm says in a statement.
Details of the CUT method used in the Amazon case
Last week’s BVWire covered the 9th Circuit decision in the Amazon case that affirmed the U.S. Tax Court’s 2017 decision in favor of the company in a transfer pricing case.
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.
Tax Court’s Amazon valuation ruling stands up to 9th Circuit scrutiny
The 9th Circuit recently affirmed the U.S. Tax Court’s 2017 decision in favor of Amazon in this key transfer pricing case, finding the governing regulations limited the definition of “intangible” to independently transferrable assets.
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.
DCF Modeling for Early Stage Enterprises: A Fair Value Update
In In this panel discussion Antonella Puca, Andreas Dal Santo and Shilpa Chandra will discuss the special characteristics of DCF modeling as they pertain to the valuation of companies that are in the early years of their life and that have yet to become profitable (early stage enterprises or “ESE”s). Learn the relevance of terminal value in driving valuation for ESEs and the dynamic nature of the model, which can be adjusted at subsequent measurement ...
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.
Court whittles down damages in Vinoskey ESOP case
The trial court recently unequivocally sided with the Department of Labor in its liability findings against the defendants in the Vinoskey ESOP case, but the court made adjustments to the DOL’s damages calculation that reduced the liability to the defendants considerably.
9th Circuit Upholds Tax Court’s Valuation of Intangibles in Big Transfer Pricing Case
Appeals court affirms Tax Court ruling favoring taxpayer’s CUT method over IRS’ DCF to value various intangible assets transferred to European subsidiary; governing regulations limit definition of “intangible” to independently transferrable assets, excluding residual business assets, court says.
Amazon.com, Inc. v. Commissioner (II)
Appeals court affirms Tax Court ruling favoring taxpayer’s CUT method over IRS’ DCF to value various intangible assets transferred to European subsidiary; governing regulations limit definition of “intangible” to independently transferrable assets, excluding residual business assets, court says.
Expert comments on Vinoskey ESOP ruling
ESOP appraisers are questioning the technical aspects of the Vinoskey and Brundle rulings and asking what the recent rulings may mean for the future of employee ownership plans.