The implementation and application of firm valuation models

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dc.contributor.author	Petersen, Christian	en_US
dc.contributor.author	Plenborg, Thomas	en_US
dc.date.accessioned	2009-02-04T10:24:34Z
dc.date.available	2009-02-04T10:24:34Z
dc.date.issued	2008-12-16T00:00:00Z	en_US
dc.identifier.uri	http://hdl.handle.net/10398/6746
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
dc.publisher.city	København	en_US
dc.publisher.year	2008	en_US