Valuation Experts Research Articles

Valuation Expertise of Flats in the Secondary Housing Market by Means of Multicriteria Ranking Evaluation of an Object

This article deals with implementation of comparative valuation of several flats in the secondary housing market in the city of Volgograd. The methodology of multi-criteria ranking evaluation of the qualitative level of flats, which was suggested by the authors earlier, is used as a means of such valuation. The numerical ratings of the index of consumer preferences obtained by the authors are applied to the valuation price of the alternatives under consideration. The obtained revaluation coefficients are analyzed from the standpoint of a seller and that of a buyer.

Variables Affecting ZNT Implementation in Communities Semarang City

The Land and Building Tax Imposition Base (NJOP) is used to determine the basis for Land and Building Taxes. But in reality, NJOP sometimes does not match fair market values. By land valuation experts, a method was formed which approached real land prices, namely the Land Value Zone (ZNT). ZNT in its application and development raises diverse responses. For that, we need to study variables affecting the implementation of ZNT in the community. Therefore, the city of Semarang is considered suitable for case studies on the implementation of ZNT because it is the center of economic activity in Central Java Province. This research is expected to provide benefits regarding the implementation of ZNT as a method to determine the amount of NJOP. The level of acceptance of ZNT implementation in society is measured by 10 variables. The data in this study were obtained using a questionnaire sampling to community. Questionnaire results are then analyzed so as to help further explain statistical results that have been obtained. Facts on the ground show that the people of Semarang City feel the ease and accuracy as well as the fair transparency of market prices for land in ZNT. The analysis results that have been found, there are 3 variables that most influence, namely politics, communication with the parties concerned, and socialization of ZNT. Those improvements are needed on the internal and external factors of the ZNT method and coordination, communication and cooperation between the government and the community.

Monitoring of Fair Value Reliability by Third-Party Specialists: A Review and Integration of Empirical Research

This paper reviews the academic literature on the effectiveness of third-party specialists in monitoring the reliability of fair value measurements (FVMs). Management may lack the necessary valuation expertise for measuring fair values and has been shown to provide biased FVMs. The use of third-party specialists may compensate for these deficiencies. By integrating findings in the accounting, economics, and finance literature, this review provides novel insights into the monitoring role of third-party specialists and suggests directions for future research. Overall, the literature shows that third-party specialists are associated with more reliable FVMs across both financial- and nonfinancial assets or liabilities, supporting the notion that third-party specialists perform a valuable role in improving the reliability of FVMs and reducing investors’ information risk. Furthermore, research suggests third-party specialists monitoring effectiveness interact with corporate governance mechanisms such as independent board of directors, but financial statement audits seem to only marginally affect the reliability of FVMs above the contribution of third-party specialists. Third-party specialists monitoring effectiveness may, however, be moderated by specialists’ economic incentives and by experienced client pressure to inflate FVMs. Future research will benefit from gaining a better understanding of specialists’ economic incentives and how these influence specialists’ monitoring effectiveness, as well as investigate how specialists’ monitoring role interacts with relevant corporate governance mechanisms.

THE ROLES OF FORENSIC ACCOUNTANTS IN PREVENTION AND DETECTION OF MONEY LAUNDERING IN PHOENIX ACTIVITIES

The process of company liquidation is always full of money laundering allegations and vulnerable to fraud. This fraudulent scheme is referred to as phoenix activity. The main purpose of phoenix activity is to avoid liability and expenses, which detriments the stakeholders. This research explains the importance of the role of forensic accountants prior, during, and after bankruptcy. The methodology used in this research is literature review examining the problems through various researches and frameworks. The literature review discusses three aspects related to fraudulent bankruptcy scheme i.e. motivation, the scheme processes and litigation processes. The research concludes that the presence of forensic accountants is important in the insolvency prevention and detection, in their roles as(1) independent and hired experts; (2) professional legal assistance providers of Anti-Money Laundering (AML) and asset manager; (3) business valuation experts; (4) private investigators; and (5) surveillance body for anti-money laundering purposes.

Goodwill valuations certified by independent experts: Bigger and cleaner impairments?

AbstractIf firms disclose the use of independent valuation experts to assess the magnitude of goodwill impairments, should investors rationally condition their values on that disclosure? This research shows that firms that disclose the use of an independent valuation expert are more likely to report a higher impairment charge in an impairment year but, critically, after controlling for other determinants, the disclosing firms are less likely to have impairments in following years. Thus, when the use of an independent expert is disclosed, while it is rational for investors to downgrade firm value on the basis of the disclosed (higher) impairment charge in that year, there is simultaneously a reduced need to add an additional discount to anticipate further (strategically) delayed impairment charges. The investors need to consider the likely multi‐period time series properties of impairments, and firms may benefit from using an expert if in anticipation of future related impairments, investors significantly reduce the discount applied.

The role of knowledge in valuation practice: expert valuers’ perceptions

PurposeThe purpose of this paper is to explore the role knowledge plays in expert commercial valuer practice to unpack the way theoretical and experiential knowledge operates in order to improve practice and education.Design/methodology/approachAdopting a cognitivist perspective and identifying meta-reasoning, using a grounded theory methodology, through the study of 11 chartered valuation surveyors practicing in Birmingham, United Kingdom, the distinctive theoretical and experiential knowledge they used was elicited through their in-depth reflection on a valuation task followed by analytical interviews exploring meaning and reasons of actions described.FindingsThe results confirmed that multi-sourced and rich valuation knowledge was a key attribute of a valuation expert. However, the experiential knowledge was not used to undertake the task but to select the methods and knowledge appropriate for the task and context. This meta-reasoning is a key to the speed, accuracy and justification of their practices. Thus, the experience gained from many years of valuation provides expert valuers with meta-reasoning involving knowledge of what, how and when to deal with problems in different circumstances such as the knowledge of markets and handling of clients.Practical implicationsMaking meta-reasoning a key aspect of valuation will identify its characteristics more clearly, thus assisting the development of practitioners and providing a new focus for education to advance professional goals.Originality/valueMeta-reasoning and meta-cognitive knowledge have not been identified as a key to successful valuation practice. This meta-reasoning allows a subtle balance of theory and experience in valuation practice that is appropriate to the situation.

Raising the Key Issues Facing Resettlement Practice in Development Induced Displacement: Evidences From Households Displaced by Railway Construction in Dukem, Ethiopia

Development projects are often resulted in massive displacement and resettlement of people. Despite the gradual improvement in resettlement practices and results, the impoverishments caused by development projects’ displacement and resettlement are still widely observed in many developing countries. This study is intended to investigate the key issues facing resettlement practices based on experiences from households displaced by railway corridor construction in Dukem area, central Ethiopia. Data were collected by using semi-structured interviews, focus group discussions and archival file reviews. The study has revealed that policy, legal and practical factors were constraining effective resettlement and rehabilitation of the displaced households. The study indicates that the existing Ethiopian policy and legal frameworks on resettlement and rehabilitation of displaced people in the context of development projects were not effectively implemented in the study population context. The practice of valuation, compensation and expropriation were not fair and satisfactory mainly due to lack of objective criteria of evaluation, lack of technically competent valuation experts and widespread corruption in valuation and compensation of properties. The existing policy and legal frameworks on resettlement and rehabilitation of evicted people also lacks a clear statement on the livelihood rehabilitation of displaced households. The current compensation practice is monetary-based, inadequate, delayed and the rehabilitation approach lacks special consideration for vulnerable groups. Therefore, the researcher recommends the need for devising policy, legal and institutional frameworks which have clear provisions on how to deal with the multifaceted problems of displacement, resettlement and rehabilitation. Additionally, ensuring effective reform to the structures of implementing agents of resettlement is very important.

Goodwill Valuations Certified by Independent Experts: Bigger and Cleaner Impairments?

If firms disclose the use of independent valuation experts to assess the magnitude of goodwill impairments should investors rationally condition their values on that disclosure? This research shows that firms that disclose use of an independent valuation expert are more likely to report a higher impairment charge in an impairment year, but critically after controlling for other determinants we show disclosing firms are less likely to have impairments in following years.Thus, when use of an independent expert is disclosed, while it is rational for investors to downgrade firm value on the basis of the disclosed (higher) impairment charge in that year, there is simultaneously a reduced need to add an additional discount to anticipate further (strategically) delayed impairment charges. That is investors’ need to consider the likely multi-period time series properties of impairments and firms may benefit from using an expert if investors significantly reduce the discount applied in anticipation of future related impairments.

Incorporating environmental costs of ecosystem service loss in political decision making: A synthesis of monetary values for Germany

Germany faces on-going degradation and biodiversity loss. As a consequence, goods and services provided by biodiversity for human well-being, so-called ecosystem services, are being lost. The associated economic costs and benefits are often unknown. To fill this gap, we conducted a literature review and developed a database of monetary values for the changes in ecosystem services that result from ecosystem change in Germany. In total, 109 monetary valuation studies of regulating and cultural ecosystem services were identified, with the majority focusing on forests and wetlands. In collaboration with valuation experts and the German Federal Environment Agency—Umweltbundesamt (UBA), we defined a set of criteria that economic valuation studies should meet in order to qualify for being used in decision making on national policies. Only 6 out of 109 valuation studies (5.5%) fulfilled the quality criteria for informing such decisions. Overall, monetary information on regulating and cultural ecosystem services is scattered and scarce compared to information on provisioning services, which is accounted for in detail in national statistics. This imbalance in information likely contributes to the distortion in land-use policies, giving preference to maximizing provisioning services in agricultural production and forestry, while neglecting the societal relevance of regulating and cultural services. Decision makers have to rely on only a few cost estimates that are scientifically robust, while being pragmatic to include also vague estimates in cases where data is lacking. The transferability of the monetary values included in our database depends on the biophysical and socio-economic site conditions as well as the decision context of the intended application. Case specific adjustments following guidance for benefit transfer are recommended. Given the lack of applicable studies, we call for more decision-relevant economic assessments. Even in cases where monetary estimates are available, we suggest decision makers to consider also other benefit information available to capture the multiple values ecosystems provide to humans.

La tasa de descuento en el proceso de valoración de empresas: un estudio empírico en Colombia

La valoración de empresas es una actividad cada vez más importante en un contexto globalizado, con empresas más dinámicas e internacionalizadas en busca de la creación de valor. La internacionalización afecta cada vez más a los países en desarrollo que se ven impelidos a tratar con operaciones de compra-venta internacionales y demandas de sus partners cada vez más especializadas, como es el caso de Colombia. Normalmente el método utilizado en la valoración es el descuento de los flujos de efectivo, lo que precisa el uso de tasas de actualización ad-hoc. Este trabajo tiene como objetivo principal analizar la aplicación de la tasa de descuento en la actividad de valoración de empresas en Colombia. Para ello se lleva a cabo un estudio exploratorio de carácter empírico, sobre una encuesta realizada a 32 expertos colombianos en valoración de empresas. Nuestras principales conclusiones revelan que los valoradores colombianos siguen pautas comunes a los valoradores internacionales, aunque se observa una gran dispersión a la hora de estimar la tasa de descuento. De esta forma el trabajo realizado puede ser de interés no solo para los profesionales de la valoración, sino también para los académicos y empresarios que estén inmersos en este proceso, ya que ofrece información sobre la realidad colombiana en un contexto internacional

A hidden challenge for fostering innovation: selection of IP valuation methods

Purpose- There exist a large variety of sources on the definition or application process of the IP Valuation methods in literature, but there is still room for research for applications, related cases and preference criteria of each method as the theoretical and practical publications are very limited. Before starting IP valuation process there are some fundamental prerequisite steps such as setting the purpose of valuation, acquiring deep knowledge about the IP technology being valued, definition of the type of the process of patent application, defining TRL of IP and identifying the available data. To fulfil the gap of knowledge, the main aim of this study is to provide a case study for developing country context by exploring the current practices of patent valuation methods and determining the applicability, usefulness, challenges, necessities and advantages of IP valuation methods in IP ecosystems of technology. Methodology- Within a qualitative research methodology which utilized the experiences of the IP valuation experts and professionals in technology transfer ecosystem in Turkey, Europe and USA, data were collected through structured in-depth interviews and Delphi Survey about level of expert knowledge, level of usage for different quantitative IP valuation methods, the purpose of using different IP valuation methods, challenges or benefits of applying the methods in patent valuation. Findings- Findings revealed that replacement cost, reproduction cost, sales comparison, DCF, the 25 percent rule, comparable profit margin and RFR methods are widely preferred and known IP valuation methods which are priorly expressed by the respondent experts of this study. Advanced valuation methods are much rarely known and used when compared to previously stated methods. In order to make effective and well-supported estimates of an IP value, more than one valuation method which can be selected according to the objectives and different situations and qualitative parameters should be considered because of their indirect effect to the valuation. Conclusion- The findings of this study show the whole necessities/inputs to apply valuation method in line with the literature. When an IP is valued, qualitative parameters should be considered because of their indirect affect to the valuation. In order to make effective and well-supported estimates of an IP value, more than one valuation method which can be selected according to the objectives and different situations and qualitative parameters should be considered because of their indirect effect to the valuation. This study is expected to help valuers that are in need of choosing most suitable valuation method for their IPs.

Expert problem solving practice in commercial property valuation: an exploratory study

PurposeThe purpose of this paper is to identify the core dimensions of problem solving of experts in commercial valuation in order to provide a rich stimulus for managing current practice and enabling future development.Design/methodology/approachThe study adopted a cognitive position but emphasised understanding the everyday commercial property valuation practice in a naturalistic context and from the participants’ perspectives. Given this, a grounded theory approach was employed as a research strategy to guide the data collection and surface theoretical interpretations. Data were obtained through in-depth interviews with practicing valuers working in private real estate firms within metropolitan Birmingham, UK.FindingsThe interviews uncover four dimensions of experts’ problem-solving practice in commercial valuation: multidimensional, domain-specific knowledge base; cognitive process that is centred on analysis and reflection; collaborative problem-solving venture with colleagues; and professional practice issues awareness. A conceptual model is proposed which integrates these dimensions enabling a clearer understanding of the nature of valuation work.Research limitations/implicationsThis study was designed to be descriptive and theory generating, thus, the findings cannot be generalised as the sample was confined to one city and consists of a small number of senior practicing valuers. Therefore, the findings may not be fully applicable to other practicing valuers, other geographical locations or more widely to other types of property valuation. Nevertheless, the findings provide an important cognitive framework which can be verified by other researchers seeking to examine the practice of expert valuers.Practical implicationsThe identification of the core dimensions of expert problem solving in commercial property valuation is shown to have implications for valuation practice, education and continued research. The valuation practice environments need to develop mechanisms to provide time that would enable these multi-dimensions of professional competence to be developed. Further work is needed to expand and refine the model across expert practice in other specialty areas of valuation practice.Originality/valueThis study expands the current understanding of valuation process to areas of expertise that have received less coverage in behavioural valuation literature, that is, the central role of knowledge and cognition and how these are integrated for effective valuation problem solving and decision making.

The Utility of Finance

Public Utilities Commissions (PUCs) are charged with regulating a public utility’s rates at levels that serve the public’s interest while allowing the utility’s investors to earn a rate commensurate with that expected by businesses facing similar risks. Although the process of adjusting rates for risk is a staple of modern finance, we know surprisingly little about how well accomplish their regulatory mandate when judged against the benchmarks of financial economics. This article analyzes a dozen years’ worth of gas and electric rate-setting decisions from PUCs in the United States and Canada, demonstrating empirically that allowed returns on equity (ROE) diverge significantly and systematically from the predictions of accepted asset pricing methodologies in finance. Our analysis suggests that current regulatory practice more plausibly reflects an amalgam of other non-finance desiderata, including political goals, incentive provision, and regulatory capture. For example, elected PUCs award significantly lower ROEs than appointed ones. We nevertheless conjecture that the divergence of observed regulatory behavior from asset-pricing fundamentals may be due (in part) to a lack of financial valuation expertise among regulators. To test this conjecture, we study a unique field experiment that exposed commissioners and their staffs to immersion training in finance. We find evidence that treated PUCs began to issue ROE rulings that were (moderately) more aligned with standard asset pricing theory than those of untreated placebo groups. Our results suggest that it is possible to train non-expert legal and regulatory decision-makers to exhibit greater fidelity to principles of financial economics.

Inferring The Cost Of Equity: Does The CAPM Consistently Outperform The Income And Multiples Valuation Models?

A number of surveys reveal that a large number of analysts, valuation experts, investors, chief financial officers and finance academics employ the capital asset pricing model (CAPM) of Sharpe (1962) and Lintner (1965) to estimate the cost of equity. There are, however, a number of alternative valuation models that can be used to infer the cost of equity. These alternative equity valuation models include the constant growth dividend discount, the earnings and book market multiples, the residual income and the Ohlson and Juettner-Nauroth (2005) abnormal earnings growth (AEG) models. Using four mature retail firms listed on the Johannesburg Stock Exchange, this paper tested for the equivalence of these models to the CAPM in estimating the cost of equity. The study found that the variants of the constant growth dividend discount and the AEG models give similar estimates which are closer to those of the CAPM. The variants of the price-to-earnings market multiples, price-to-book market multiples, and residual income models all yield estimates that are higher than those of the CAPM. Finally, the estimates seem to be affected by the stability of the firm’s earnings and financial position.

Valuation methodologies for business startups: a bibliographical study and survey

The aim of this study was to research and analyze the different methodologies used for the valuation process and identify which are the most suitable for startup companies in the Brazilian market. The investigation was carried out by means of bibliographical research articles through the databases Scopus and Web of Science and through interviews with professional experts in valuation of companies. The approach of the subject valuation for business startups, presents plenty of opportunities in the countries of Central and South America by their limited amount of scientific production found in databases of scientific productions. From the market point of view, the article presents important contribution to the promotion and maintenance of startups projects, many of which in the early stage of deployment, since it will serve as a source of consultation for such category of company that needs to identify the better options in the process of valuation for startups and companies as support for the economic and financial viability study of projects in the early stage, supporting the professional segments of Administration, Finance and Engineering Production, not limited only to those. The originality of this research is to make a direct relationship of valuation commonly used with startups definitions proposed by Blank and Dorf (2014) and Ries (2011).

The ‘Value to the Owner’ Objective and its Implications in the Separate Recognition of Personal and Enterprise Goodwill

The Court is often confused when duelling valuation experts present apparently different evidence. Without a recognised theory, valuation evidence can appear disorderly and potentially contradictory. This is particularly evident in the more complex valuation task of business valuation as often presented to the Court by specialist accountants.

Der Einfluss städtischer Grünflächen auf die Immobilienpreise: Eine hedonische Analyse für die Stadt Berlin

Urban green space represents a key aspect for the sustainable development of urban areas. The benefit of urban green space can also be reflected in higher property and land prices. Although a high number of international studies prove the impact of urban green on real estate prices, the empirical basis in Germany is still very limited. The overall purpose of this study is to investigate the impact of urban green space on real estate prices in Germany. The data set contains transaction data for single family homes (1996-2012) provided by the Committee of Valuation Experts (GAA, Gutachterausschuss für Grundstückswerte) for the city of Berlin and cross section geo-coded data for urban green drawn from the European Urban Atlas (EUA) of the European Environment Agency. In order to control for additional open space categories we further incorporated geo-coded data on water bodies, forest, farmland and fallow land. The analysis shows a positive impact of urban green on real estate prices. The results provide helpful information on the capitalization of urban green space in real estate prices.

When Do Auditors Use Specialistss Work to Develop Richer Problem Representations of Complex Estimates?

Auditors must recognize problematic patterns among the assumptions underlying complex estimates to identify misstatements. Pattern recognition requires rich problem representations of estimates that auditors may have difficulty developing given their lack of valuation expertise. In two experiments, I predict and find that a relational cue in a specialist’s work showing how assumptions relate to each other can improve auditors’ problem representations and subsequent judgments about estimates. However, this improvement only occurs when a feature of the environment motivates auditors to incorporate this cue into their problem representations. This suggests auditors do not always respond to cues in their specialists’ work and suggests avenues for research to improve auditors’ use of specialists’ work. More generally, my findings highlight the role of motivational factors in auditors’ development of problem representations. This has implications for the design of training, decision aids, and other interventions aimed at improving auditors’ problem representations.

Multicriteria evaluation of sustainable energy solutions for Colosseum

Colosseum is a large office building in the capital region of Finland. The building owner operates on the highly competitive office rental market. With increasing emphasis on environmental responsibility, energy efficiency and sustainable energy solutions can provide competitive edge on the rental market. This study evaluates in terms of multiple criteria different alternatives to enhance the energy solutions of the building. The alternatives included different configurations of solar power, ground source heat, and roof constructions, along with district heating. Decision criteria included internal rate of return, energy efficiency, CO2 emissions, and attractiveness. Attractiveness was evaluated by a set of experts in office building valuation. The alternatives were compared using Stochastic Multicriteria Acceptability Analysis (SMAA), which is a simulation based method for decision problems where different kinds of uncertain information are represented by probability distributions. As novelty, the pairwise winning indices were used to form a stochastic ranking of alternatives. Analyses were conducted both without and with decision maker’s preference information. Most preferred alternatives were based on ground source heat. However, these alternatives require extensive renovation to install a hydronic central heating system. If such renovation is considered infeasible, then solar power alternatives become most preferred.

THE ROLES OF FORENSIC ACCOUNTANTS IN PREVENTION AND DETECTION OF MONEY LAUNDERING IN PHOENIX ACTIVITIES

The process of company liquidation is always full of money laundering allegations andvulnerable to fraud. This fraudulent scheme is referred to as phoenix activity. The main purposeof phoenix activity is to avoid liability and expenses, which detriments the stakeholders. Thisresearch explains the importance of the role of forensic accountants prior, during, and afterbankruptcy. The methodology used in this research is literature review examining the problemsthrough various researches and frameworks. The literature review discusses three aspectsrelated to fraudulent bankruptcy scheme i.e. motivation, the scheme processes and litigationprocesses. The research concludes that the presence of forensic accountants is important in theinsolvency prevention and detection, in their roles as (1) independent and hired experts; (2)professional legal assistance providers of Anti-Money Laundering (AML) and asset manager; (3)business valuation experts; (4) private investigators; and (5) surveillance body for anti-moneylaundering purposes.