An Evaluation Of Fair Value Accounting For Employee Stock Options

This paper employs static and simulation analysis to consider the measurement properties of the currently active accounting standards for reporting compensation expense related to Employee Stock Options. We find that under a wide range of plausible scenarios the reported expense significantly understates the cash cost incurred by the entity at exercise. The paper includes a discussion of implications for practice and standards setters

Valuing Businesses In Cyclical Industries

Given the potential sensitivity of business values to industry business cycles, it is imperative that valuators consider business cycles when executing valuations of firms that tend to be sensitive to these industry-level fluctuations. Failure to consider earnings cycles in industries where they are significant can result in extreme over and undervaluation of business enterprises. The methods presented in this paper can help a valuation professional to utilize industry cycle information to dramatically improve the quality of value estimates

Preparing Your Business for Valuation

There is a tremendous need for the valuation of small businesses. Oftentimes, small businessowners do not have the wherewithal to gather the data and keep it up to date for use in situations that require valuation. Formal valuations are necessary because they provide objective evidence of value, in contrast to value set by markets on which public companies are traded. This article focuses on some factors that impact the valuation of the business and will help small businessowners feel more comfortable talking with financial professionals about how the business might be valued

The use of earnings capitalization in the valuation of growing firms

This paper presents two new models for valuing closely held businesses that are experiencing growth. These models supplement the existing growth model and incorporate alternate assumptions regarding the character of future growth. Copyright © 2009 The Berkeley Electronic Press. All rights reserved

The Use of Earnings Capitalization in the Valuation of Growing Firms

This paper presents two new models for valuing closely held businesses that are experiencing growth. These models supplement the existing growth model and incorporate alternate assumptions regarding the character of future growth.

Estimating Capitalization Rates for the Excess Earnings Method Using Publicly Traded Comparables

The Excess Earnings Method requires the estimation of two capitalization rates, and the difficulty of estimating these has been suggested as a deterrent to greater use in business valuations. This paper presents a mathematically-derived set of formulas which allow the valuator to derive capitalization rates from publicly traded comparables. The paper provides implementation guidance and surveys empirical research which supports the use of the Excess Earnings Model for practical valuation work.