New Meta-Analysis Study Reveals Diminished Size Premium
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.
Musings on the Cost of Capital
A veteran appraiser presents an interesting retrospective on the cost of capital and offers some observations on current practice.
BVU News and Trends December 2019
A monthly roundup of key developments of interest to business valuation experts.
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.
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.
Tales From the Trenches: Buildup Approach—The Data May Be Correct, But Is the Conclusion Appropriate?
This is an article in a series of valuable lessons to be learned based on the experiences of seasoned valuation experts. While you may be able to find some of this advice in books, only real-life experiences can highlight the nuances that can only be found in the minds of the experts who have lived through many engagements.
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.
Tales From the Trenches: The Case of the 70% Equity Interest Valued as a Minority
Don’t assume a 70% interest represents a majority for valuation purposes. This is the latest in our series of articles from veteran appraisers based on actual engagements.
BVU News and Trends October 2019
A monthly roundup of key developments of interest to business valuation experts.
The IP in IPO: IP Valuation Lessons from Recent Public Exits
The year 2019 is shaping up to be a record year for IPOs: from iconic brands, such as Levi Strauss, to technology disruptors, such as Lyft and Pinterest, billions of dollars in valuations have been realized through public exits, providing hefty returns to investors and shareholders. When it comes to understanding what triggers the enormous valuations of some of these companies (commonly known as “unicorns”—a private startup with a valuation in excess of $1 billion ...
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.
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.
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.
Tales From the Trenches: Company Research: The Internet May Be Right, But It May Also Be Wrong!
This is an article in a series of valuable lessons to be learned based on the experiences of seasoned valuation experts. While you may be able to find some of this advice in books, only real-life experiences can highlight the nuances that can only be found in the minds of the experts who have lived through many engagements.
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.