The implementation and application of firm valuation models


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The implementation and application of firm valuation models

Vis færre oplysninger Petersen, Christian en_US Plenborg, Thomas en_US 2009-02-04T10:24:34Z 2009-02-04T10:24:34Z 2008-12-16T00:00:00Z en_US
dc.description.abstract This study focuses on methodological errors that arise when firm valuation is carried out in practice. Violation of assumptions underlying the valuation models are examples of methodological errors. We analyze valuation spreadsheets from five Danish financial institutions (i.e., stockbrokers and corporate finance departments) in order to trace if firm valuation models are properly applied. We conclude the following: (i) Methodological errors often cause valuation models to generate estimates that differ significantly from the theoretically correct value; and (ii) Firm value estimates were biased due to a variety of methodological errors. The implications of those errors may be significant. Investors are exposed to poor recommendations. Financial institutions such as investment bankers and stockbrokers may be exposed to bad reputation and lawsuits. Accounting firms that do not carry out firm valuation correctly (for example in testing goodwill for impairment) also run the risk of litigations. en_US
dc.format.extent 28 s. en_US
dc.language eng en_US
dc.relation.ispartofseries Working paper;2008-03 en_US
dc.title The implementation and application of firm valuation models en_US
dc.type wp en_US
dc.accessionstatus modt08dec16 nijemo en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Institut for Regnskab og Revision en_US
dc.contributor.departmentshort RR en_US
dc.contributor.departmentuk Department of Accounting and Auditing en_US
dc.contributor.departmentukshort AA en_US
dc.idnumber x656559003 en_US København en_US
dc.publisher.year 2008 en_US

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