Initial Valuation Research Articles

A novel approach to commercial property valuation: Successive term indexing and its competitive implications

The development of innovative valuation models in the commercial real estate sector is crucial for enhancing competitiveness, as they provide stakeholders with the accuracy and adaptability needed to navigate and capitalize in an increasingly complex market landscape. This paper aims to improve initial valuations provided by real estate agents by updating their timeliness while also enhancing their accuracy. Leveraging statistical techniques based on hedonic regression, it introduces a novel mechanism, successive term indexing, enabling the reassessment of widely varying commercial properties with initial assessments that are at least one term old, where a term typically encompasses one year. The model's novelty lies in its approach to indexing individual property characteristics across two successive terms, using a k-means algorithm to categorize all numerical variables and stepwise selection. The former enables differing index values for varying sizes, while the latter allows dynamic evaluation of the significance of regressors in time. Applied to data from a banking institution, the model showcases strong predictive accuracy with unique reassessment ratios ranging from -3.8% to 5.2% for 2022. With its nuanced analysis of market dynamics and indexing capabilities, the mechanism intersects the elements of PPIs and AVMs, presenting a significant methodological advancement and a practical, simple-to-use tool for valuation.

Characteristics of spatial and temporal changes in ecosystem service value and threshold effect in Henan along the Yellow River, China

Ecosystem services (ES), which serve as the link between human activities and natural ecosystems, are crucial for maintaining ecological balance and supporting economic development. The Ecosystem Services Value (ESV) is an indicator used to quantifying ecosystem services. Accurately estimating the dynamics of ESV and the threshold effects of influencing factors is of great importance for the sustainable development of the region. This study constructs an ESV valuation model based on the equivalent factor method, incorporating construction land, and corrects the initial valuation results in three dimensions. By constructing a random forest model and integrating partial dependence analysis, Elevation, Evapotranspiration, Normalized Difference Vegetation Index, and the proportion of built-up land area were identified as significant factors in determining ecologically vulnerable areas within the study region. The results show that: (1) The total ESV in Henan along the Yellow River in 2000, 2005, 2010, 2015, and 2020 was 204.612 billion yuan, 249.775 billion yuan, 239.100 billion yuan, 234.868 billion yuan and 202.767 billion yuan, respectively. The overall trend of change is first growth and then decline, with spatial features remaining relatively stable, and ESV polarization becoming more pronounced. (2) The spatial clustering characteristics of ESV in Henan along the Yellow River are remarkable, and the cold and hot spot areas show a bidirectional expansion trend. The cold spot areas expand substantially around the construction land, whilethe hot spot areas show a small expansion around the western mountain areas and the vegetation areas along the Yellow River, but the overall growth is slower. (3) The main factors affecting ESV include three natural factors and one anthropogenic factor, namely evapotranspiration (ET), the proportion of built-up land area (POB), normalized vegetation index (NDVI) and elevation (ELEV). ESV is at a high level when ELEV>718 m, ET<90 mm, NDVI>0.7, and POB<25.67 % approximately. The study results can provide an important theoretical basis for the development of comprehensive ecological protection measures. Furthermore, they can contribute to the sustainable development of the Yellow River Basin.

Valuations of target items are drawn towards unavailable decoy items due to prior expectations.

When people make choices, the items they consider are often embedded in a context (of other items). How this context affects the valuation of the specific item is an important question. High-value context might make items appear less attractive because of contrast-the tendency to normalize perception of an object relative to its background-or more attractive because of assimilation-the tendency to group objects together. Alternatively, a high-value context might increase prior expectations about the item's value. Here, we investigated these possibilities. We examined how unavailable context items affect choices between two target items, as well as the willingness-to-pay for single targets. Participants viewed sets of three items for several seconds before the target(s) were highlighted. In both tasks, we found a significant assimilation-like effect where participants were more likely to choose or place a higher value on a target when it was surrounded by higher-value context. However, these context effects were only significant for participants' fastest choices. Using variants of a drift-diffusion model, we established that the unavailable context shifted participants' prior expectations towards the average values of the sets but had an inconclusive effect on their evaluations of the targets during the decision (i.e. drift rates). In summary, we find that people use context to inform their initial valuations. This can improve efficiency by allowing people to get a head start on their decision. However, it also means that the valuation of an item can change depending on the context.

Evolving Evidence-Based Value Assessment of One-Time Therapies: Tisagenlecleucel as a Case Study.

Economic evaluation of one-time therapies during reimbursement decision-making is challenging due to uncertain long-term outcomes. The availability of 5-year outcome data from the ELIANA trial and real-world evidence of tisagenlecleucel, the first chimeric antigen receptor T-cell (CAR-T) therapy, presents an opportunity to re-evaluate the predictions of prior cost-effectiveness analyses (CEAs). To conduct a systematic literature review (SLR) of prior CEAs of tisagenlecleucel for pediatric/young adult relapsed or refractory acute lymphoblastic leukemia (r/r ALL) and evaluate the impact of recently available 5-year efficacy data from ELIANA and advances in CAR-T manufacturing in an updated CEA model. OVID MEDLINE/Embase and health technology assessment (HTA) databases were searched for full-text economic evaluations in English reporting cost-effectiveness results for tisagenlecleucel for r/r ALL. Evaluations with publicly reported incremental cost-effectiveness ratios (ICERs) were included in the SLR. Study screening and data abstraction were conducted following PRISMA guidelines. Data extracted included the country/currency, perspective, clinical trial evidence, model structures, long-term efficacy extrapolation approaches (i.e., overall survival [OS]), time horizon, discount rates, and outcomes (i.e., life years [LY], quality-adjusted LY [QALY], and ICERs). The CEA model reported in Wakase et al. was updated using 5-year OS data from ELIANA and the CAR-T infusion rate informed by real-world practice. Sixteen records corresponding to 15 unique studies were included in the SLR (11 publications and 5 HTA reports); all were conducted from the health care system perspective of the respective countries. Most studies found tisagenlecleucel to be cost effective, but all studies' projected 3- and 5-year OS rates for tisagenlecleucel were lower than the observed 3- and 5-year rates, respectively, derived from 5-year ELIANA data. When applying updated OS projections from the most recent ELIANA data cut and higher infusion rates of 92.5% (per the real-world infusion rate)-96.0% (per the manufacturer success rate) to theCEA of Wakase et al., the associated QALYs for tisagenlecleucel increased from 11.6 to 14.6-15.0, andLYs increased from 13.3 to 17.0-17.5. Accordingly, the ICERs for tisagenlecleucel decreased from ¥2,035,071 to ¥1,787,988-¥1,789,048 versus blinatumomab and from ¥2,644,702 to ¥2,257,837-¥2,275,181 versus clofarabine combination therapy in the updated CEA model. Projections at launch of the likely cost effectiveness of tisagenlecleucel appear to have underestimated its ultimate economic value given more recent trial and real-world data. To balance uncertainty in initial valuation with the need to provide access to novel oncology therapies, payers can consider flexible reimbursement policies alongside ongoing assessments as new data emerge.

Predicting low-performance government-sponsored R&D project: comprehensive framework and machine learning approach

ABSTRACT In response to the Korean R&D paradox, which has intensified during the post-global financial crisis, it would be critical to seek ways to improve the economic outcomes of R&D projects. In this context, this study aims to propose a framework and methodology to predict low-performance R&D projects. We considered various factors affecting the project's success, including funding, technological, environmental, organisational, and initial valuation factors. Our framework was applied to 797 R&D projects, introducing a novel BU ratio as a performance evaluation metric together with an F1 score. Then, the results of three machine learning algorithms were compared, and the XGBoost algorithm showed the best performance for predicting low-performance R&D projects. This study gained insight into the behaviour of the selected models through the SHAP value. Government funding, in terms of ratio and amount, was revealed as the most dominant feature in predicting performance groups. Organisational factors were crucial for high-performance projects, whereas funding factors dominantly affected low-performance projects. Our analytical framework and findings will contribute to academic knowledge, as no research has yet explored this. Moreover, this study will provide practical implications for funding agencies to proactively manage low-performance R&D projects and improve their economic success.

Evaluation of the Implementation of Government Accounting Standards Statement (PSAP) Number 07 concerning Fixed Asset Accounting at the Bogor Regency Population and Civil Registration Service (DISDUKCAPIL)

This study aims to find out how the implementation of fixed asset accounting and its conformity with the Statement of Government Accounting Standards Number 07 concerning Fixed Asset Accounting at Disdukcapil Bogor Regency. The type of data used is qualitative data. Sources of data used are primary data and secondary data. Data collection was carried out by means of documentation and interviews. The data analysis method used is the descriptive analysis method. The results of this study indicate that the accounting treatment of fixed assets at the Bogor Regency Population and Civil Registry Office includes classification, recognition, measurement, initial valuation of fixed assets, subsequent measurement of initial recognition, namely Depreciation and revaluation of fixed assets, disclosure and disposal and disposal of fixed assets in accordance with PSAP Number 07, except that Depreciation of Fixed Assets is not fully in accordance. Depreciation of fixed assets is not fully in accordance with PSAP Number 07 because it does not depreciate other fixed assets.

Research on the Development of Image Processing Software Industry - Taking "Meitu Xiuxiu" and "Xingtu" as Examples

This research starts with an analysis of the operating models of two major image processing softwares, Meitu Xiuxiu and Xingtu, and then explores the changes and operating rules under new technological conditions. The study focuses on these new changes under the conditions of popular demand and new technology, and concludes on how to attract users as well as increase user stickiness and enhance the business value of the Meitu platform. The aim is to analyze the development path of the image beatification software industry. As the originator of photo retouching software, Meitu was once a must install software for many girls who loved beauty. It started at the peak and relentlessly developed corresponding mobile phones and original beauty brands. From the initial valuation of more than 10 million yuan, it is not difficult to found the expectation of the capital market. Given the fact that the world is in an era of VUCA (volatility, uncertainty, complexity and ambiguity), the VUCA will determine the unpredictability of changes in the pattern of current business world. To sum up, Meitu should dig deep into the content and build the content ecological core in the "beauty" field of its expertise.

The NP's role in increasing RVU values.

The NP's role in increasing RVU values.

Financing sustainable entrepreneurship: ESG measurement, valuation, and performance

Sustainability orientation has a positive effect on startups' initial valuation and a negative effect on their post-funding financial performance. All else equal, improving sustainability orientation by one standard deviation increases startups' funding amount by 28 % and decreases investors' abnormal returns per post-funding year by 16 %. The results hold in a large sample of blockchain-based crowdfunding campaigns, also known as Initial Coin Offerings (ICOs) or token offerings. A key contribution is a machine-learning approach to assess startups' Environment, Society and Governance (ESG) properties from textual data, which we make readily available at www.SustainableEntrepreneurship.org.

An alternative valuation of public-private partnerships by using the Black-Scholes model: the Portuguese highway case

This study evaluates Portuguese highway PPPs' initial valuation using real options methods to assess the potential mispricing of these projects that is model dependent. Our findings suggest that some of these PPPs could be completed without resorting to outside financing for the initial investment by selling a right to ownership of projects. This different approach to real investments using options could also enable hedging future operational risks without changing the project operationally. Overall, our study addresses a relevant policy implication - whether governments should protect their interest by adopting PPP valuation as real options.

Is fair value information fairly priced? Evidence from IPOs in global capital markets✰

We study how the information conveyed by fair value (FV) reporting is considered during an initial public offering (IPO). By examining how pre-IPO FV earnings are perceived by underwriters and investors, we document numerous original findings. First, IPOs with higher FV earnings have higher initial valuations and subsequent price revisions, indicating that underwriters and institutional investors value the information conveyed by FV reporting. Second, there is a significantly negative relation between FV earnings and post-IPO initial returns, whereas no such relation exists between non-FV earnings and initial returns. Third, we document robust positive associations between FV earnings and various measures of post-issue long-run stock performance. Fourth, we confirm the informational content of FV earnings by showing their predictive power for future earnings. We interpret these findings as supportive of the underreaction hypotheses, whereby aftermarket investors underreact to the information contained in FV reporting in the short run and gradually recognize the value of such information in the long run. We perform numerous tests to confirm the robustness of our results, including a test to address potential sample selection bias using the adoption of IFRS for small- and medium-sized entities (SMEs) as an exogenous determinant of FV reporting. Taken together, our findings advance our understanding of how fair value information is considered during an IPO issuance.

Drawing on Architecture: The Object of Lines, 1970–1990

Drawing on Architecture: The Object of Lines, 1970–1990

Equity crowdfunding and financial literacy of individual investors in Japan

PurposeThis study aims to fill the gap in previous research that focuses on the superficial aspects of equity crowdfunding (ECF) campaigns and financial practices by examining financial literacy aspects, such as due diligence and valuation, in terms of factors that influence Japanese individual investors' investments in ECF.Design/methodology/approachThe status of information disclosure in ECF campaigns is checked. In addition, the feasibility of the initial due diligence and valuation using this information is verified. Specifically, the lack of financial literacy hypothesis is developed and (1) expected market capitalization in the final fiscal year of the business plan and (2) expected returns on investment (IRR: internal rate of return) are estimated.FindingsECF campaigns in Japan disclose information equivalent to that obtained by professional venture capitalists. Analysis of the disclosed business plan allows for initial due diligence and valuation. By contrast, due diligence reveals that some projects are unlikely to be listed even if their business plans are met, and others have low IRRs. In addition, a stock acquisition rights project, in which even professional investors are unable to calculate IRRs, is completed at the same rate as a common stock project; this suggests that individual investors lack financial literacy.Originality/valueAnalyzing ECF from financial literacy aspects, such as due diligence and valuation, is unique. Such aspects are essential for private equity investments but have not been addressed in previous studies.

Not Registered? Please Sign Up First: A Randomized Field Experiment on the Ex Ante Registration Request

Online commerce websites often request users to register in the online shopping process. Recognizing the challenges of user registration, many websites opt to delay their registration request until the end of the conversion funnel (i.e., ex post registration request). A new study in Information Systems Research explores an alternative approach by asking users to register with the website at the beginning of their shopping journey (i.e., ex ante registration request). The authors of the study, Ni Huang (University of Houston), Probal Mojumder (University of Southern California), Tianshu Sun (University of Southern California), Jinchi Lv (University of Southern California), and Joseph M. Golden (Collage.com), show that the ex ante request leads to an increased probability of user registration. Furthermore, the ex ante request leads to considerable increases in customer purchases in the long run and does not significantly influence sales in the short run. Further investigation into the long-term and short-term effects provides suggestive evidence on several potential mechanisms, such as firm-initiated interaction (e.g., email marketing campaigns) and screening of low-interest users (i.e., users with low initial valuations of the website and in a potentially disengaged state). This study provides managerial implications on the design of user-registration systems in e-commerce websites.

Reviewing strategies and the normalization of uncertain texts

Reviewers help ease cultural products’ testing transition from the stage of production to that of circulation. Given their intermediate position between stages, reviewers have to deal with uncertainty when valuating new cultural products. How do reviewers in a transnational setting make sense of a novel product that challenges existing aesthetic boundaries, has commercial success, and is made by a little-known creator? Along with the strategies of description, accommodation, and rejection, this paper argues that reviewers’ most effective, long-term strategy to normalize the uncertainty of a brand-new product is to come up with an aesthetic label for it, either by rescuing one (recycling) or by proposing a new one (neo-labeling). These two strategies of resignification help to normalize the product’s aesthetic uncertainty. This paper studies reviewers’ initial valuation of the novel One Hundred Years of Solitude. They applied the above-mentioned strategies to read the text, especially as they could not agree on its aesthetics. A key strategy consisted in recycling the little-known label magical realism. In the long-run, magical realism turned into the normal label applied to the novel worldwide. This paper offers insights into actors’ perception of uncertain cultural products and the standardization of heterogeneous interpretations of such products.

Information Frictions and Heterogeneity in Valuations of Personal Data

We investigate how consumer valuations of personal data are affected by real-world information interventions. Proposals to compensate users for the information they disclose to online services have been advanced in both research and policy circles. These proposals are hampered by information frictions that limit consumers' ability to assess the value of their own data. We use an incentive-compatible mechanism to capture consumers’ willingness to share their social media data for monetary compensation, and estimate distributions of valuations of social media data before and after an information treatment. We find evidence of significant dispersion and heterogeneity in valuations before the information intervention, with women and Black and low-income individuals reporting systematically lower valuations than other groups. After an information intervention, we detect significant revisions in valuations, concentrated among individuals with low initial valuations. Dispersion and heterogeneity in valuations across these demographic groups decrease but persist after the information intervention. The findings suggest that strategies aimed at reducing information asymmetries in markets for personal data may increase consumer welfare. At the same time, the findings highlight how consumer valuations of personal data are only in part influenced by market information.

The Valuator’s Curse: Decision Analysis of Overvaluation and Disappointment in Acquisition

Initial valuations of entrepreneurial ventures offering uncertain payoffs can often be overvalued by investors; namely, the expected payoff postacquisition is smaller than the expected payoff prior to acquisition when the investor harbors uncertainties about various components of the business. Common explanations involve irrationality such as psychological preference for potential over realized payoffs. We provide a different, rational explanation, which we term the valuator’s curse. It is similar in nature to the winner’s curse in auctions and the optimizer’s curse in decision analysis, but the source of the curse is neither from the competitive effects of an auction-type mechanism nor from the optimization effects in a choice among alternatives. Rather the effect is generated from the nonlinear evaluation of the payoffs, even though the inputs to the evaluation are unbiased. We formalize the valuator’s curse and discuss its implications to entrepreneur’s learning. The valuator’s curse proves a boon to the entrepreneur as it leads to larger capitalizations.

The Smooth Double Pareto Distribution: A Model of Private Equity Fund Returns

Whether returns of venture capital and private equity investments exhibit fat tails, particularly in the upper tail, affects how entrepreneurs and investors view the attractiveness of such investments. Using fund performance data, we propose and test a random growth model with a random initial valuation of funds to explain the observed distribution of funds’ residual-value and payout multiples. This model endogenously generates power-law tails in the cross-section from a log-normally distributed diffusion process and log-normally distributed birth valuation. We find that the resulting smooth double Pareto distribution fits the data better than competing log-normal or double Pareto models and generally performs well, apart from a small region around a valuation multiple of one. The divergence of the fitted distribution from the empirical one can be explained by an excess number of funds without distributions to investors – funds that may not have made or revalued any investments yet.

Valuation of Biological Assets at Fair Value

Today the globalisation of the world market leads to the necessity of constructive interaction in the international market and forming common standards of accounting. Transnational corporations as a phenomenon of worldwide integration are businesses with units in different countries of the world. Special issues of information support of management in agricultural organisations have become very important in the conditions of the market economy. Clear and transparent accounting in such enterprises requires the existence of common international standards. Such standards could become International Financial Reporting Standards (IFRS). They are designed to provide an understanding of financial processes in different countries for the interaction between investors and potential investment projects located in different national accounting systems. The standard “Agriculture” has great importance for the Russian Federation. Agriculture is one of the leading sectors of our country, supplying products for both domestic and foreign market. Accordingly, the adoption of this standard and the implementation of its provisions is an important and urgent issue of today’s economic reality. Introduction of this standard leads to the formation of fundamentally new methodological bases of the accounting of agricultural activities based on the market value of assets because paragraphs 12–13 of this Standard states that during the initial and subsequent valuation of biological assets will be measured at their fair value fewer costs to selling. Thus, the need to allocate biological assets in the separate account-economic category, their reflection in the accounting at fair value by the provisions of IAS 41 has determined the relevance of the topic, goal, objectives and logic of the article.

The optimal amount of information to provide in an academic manuscript

Authors may believe that having more information available about the research can help reviewers make better recommendations. However, too much information in a manuscript may create problems to the reviewers and may lead them to poorer recommendations. An information overload on the part of the reviewer might be a state in which she faces an amount of information comprising the accumulation of manuscript informational cues that inhibit the reviewer’s ability to optimally determine the best possible recommendation about the acceptance or rejection of the manuscript. Therefore the author wants to determine the amount of manuscript attributes to provide to reviewers. With this goal in mind we show that there is an intermediate number of manuscript attributes that maximizes the probability of acceptance. If too much research information is provided, some of it is not as useful for recommending acceptance, the average informativeness per research attribute evaluation is too low, and reviewers end up recommending rejection. If too little information is provided about the research, reviewers may end up not having sufficient details to recommend its acceptance. We also show that authors should provide more information to reviewers with more favorable initial valuation toward the research. For those reviewers with a less favorable prior attitude, the author should provide only the most important manuscript attributes. Given that expert reviewers face less load than potential readers, it follows that with respect to the target audience the optimal author’s strategy is also to trade off the amount of research information provided in the manuscript with the average informativeness of these items by selecting an intermediate number of attributes.