BV News and Trends May 2023
A monthly roundup of key developments of interest to business valuation experts.
Size effect is hibernating, per new paper
The size premium is more significantly related to monetary policy than to firm quality or to business cycle troughs, according to a new paper.
Ang Offers SSBV Members More Evidence of the Lack of a Size Effect
Clifford Ang (Compass Lexecon), who offered an impassioned plea to a large group from the UK’s Society of Shares and Business Valuers (SSBV), has become one of the leading proponents of eliminating or minimizing the traditional size premia. Ang has written a number of articles on the size effect and has a new book, Applied Valuation, due out early next year.
BV News and Trends June 2022
A monthly roundup of key developments of interest to business valuation experts.
Twitter poll on the size effect
Wes Gray, a Ph.D., financial analyst, and CEO of Alpha Architect, recently conducted a poll on Twitter about the size effect (implicit in traded stocks where returns can be observed).
BV News and Trends September 2021
A monthly roundup of key developments of interest to business valuation experts.
Size effect is ‘fiction,’ Damodaran reiterates
“There has been no size premium for the past 40 years,” said Professor Aswath Damodaran (New York University Stern School of Business), who has been called the “Dean of Valuation.”
New Research Paper Joins Call to ‘Let Go’ of the Size Premium
A look at the latest paper that joins mounting academic research over the recent past that shows that the size effect no longer exists—or was never there in the first place.
The Size Effect: Should We Care?
I read the entire edition of Business Valuation Review (Volume 37, Issue 3, Fall 2018) focused on ‘‘the size effect.’’ I have the following ‘‘big picture’’ comments after considering all four articles together and title my letter: The Size Effect: Should We Care?
BVU News and Trends December 2020
A monthly roundup of key developments of interest to business valuation experts.
Global BVU News and Trends December 2020
Business valuation news from a global perspective.
The Absence of a Size Effect: Letting Go Of The Size Premium
Many valuation practitioners believe that there is a size effect and add a size premium to their CAPM cost of equity. In this talk, Cliff Ang will demonstrate why the underlying premise behind the size effect no longer holds and discuss the academic literature and empirical evidence on the absence of a size effect. He then dives into the related issue, which is why valuation practitioners should let go of the size premium.
BVU News and Trends November 2020
A monthly roundup of key developments of interest to business valuation experts.
Which business characteristic guarantees a premium value?
Business valuation experts in the UK often find little benefit from the academic literature about portfolio and investment theory.
Article says the size effect didn’t vanish—it never existed
The hits keep coming to the existence of the size effect.
BVU News and Trends September 2020
A monthly roundup of key developments of interest to business valuation experts.
Latest paper in the size-effect debate
Some appraisers believe that the size effect has diminished or disappeared since it was first documented in 1981.
Using a size premium could trigger Daubert trouble, says new article
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.
More concern about the validity of the size premium factor
Most business valuers consider a size premium when calculating cost of capital for financial reporting purposes.
BVU News and Trends January 2020
A monthly roundup of key developments of interest to business valuation experts.
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.
Noteworthy highlights of the year in BV for 2019
It was a notable year for the business valuation profession in 2019, and BVWire was on the scene each and every week covering all the important developments.
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.
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.