Abstract
This paper examines the added value of expert valuations and their relationship to corporate governance. The analysis is based on a unique sample of 44 closely held public companies that were appraised by financial experts for transactions outside of the Exchange. Each valuation is examined on the basis of pre- and post-valuation data. Our key findings are: (1)expert valuations are 29% higher than market; (2) in the short-run investors respond cautiously to expert valuation; in the long-run, however, the over-valuation appears to be followed by destruction of their values; (3) both are influenced by the corporate governance structure.
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