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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.

BVU News and Trends November 2020

A monthly roundup of key developments of interest to business valuation experts.

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.

Front-Burner Issues Presented at This Year’s NYSSCPA BV Conference

Inputs into the cost of capital, cryptocurrency, and financial projections are just a few of the important topics discussed at the annual business valuation conference of the New York State Society of CPAs (NYSSCPA) in New York City. BVU attends this event every year, and here are a few takeaways from the sessions.

Hot-button issues presented at NYSSCPA BV conference

Cryptocurrency, financial projections, and inputs into the cost of capital were just a few of the important topics discussed at the annual business valuation conference of the New York State Society of CPAs (NYSSCPA) on May 20 in New York City.

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.

BVU News and Trends April 2019

A monthly roundup of key developments of interest to business valuation experts.

Latest paper on the vanishing size effect

A new academic paper, “Why Has the Size Effect Disappeared?,” explores the disappearance of the small-firm effect after the early 1980s.

BVU News and Trends March 2019

A monthly roundup of key developments of interest to business valuation experts.

Bygone size effect resurfaces in highly volatile times, per new research

Although most empirical studies find that the size effect has disappeared since the early 1980s, it shows up during times of high macroeconomic volatility, according to a new paper.

Business Valuation Review spotlights the ‘size effect’

If you’re a subscriber to BVResearch Pro, you have access to a vast amount of research material, including the full archive of Business Valuation Review, the journal of the American Society of Appraisers (ASA).

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 ...

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