Value Approach Research Articles

Two Similarities, One Firm Value: A Natural Language Processing Study of IPOs’ First-Day Returns

Conflicting results tie audiences’ valuations to firms’ similarity to category prototypes or to outliers. Explanations of these results generally assume that prototypes and outliers have a strong weight in audiences’ valuations although audiences may use them differently in different contexts. We challenge this assumption and propose that the weight of prototype similarity and outlier similarity in audiences’ valuations is contingent on prototypes’ and outliers’ prominence in audiences’ eyes in a given context. Prototype similarity plays a lesser role in audiences’ valuation when specific knowledge rather than general knowledge is needed to value an entity. Outlier similarity plays a heavier role in audiences’ valuations when recent trends in the market recall outliers’ features to audiences. We measure prototype and outlier similarity by applying a natural language processing technique to 160,000 financial documents and test our hypotheses based on the first-day returns of 2,488 U.S. IPOs from 1996 to 2015. We find that firms with prototype similarity are less underpriced in low-tech industries, but that this effect disappears in high tech industries, where more specific knowledge is required to value any particular firm. Firms with outlier similarity are more underpriced, particularly during periods of hot IPO market, during which highly underpriced IPOs are recalled to investors. Our findings extend understandings of optimal distinctiveness, valuation, market categories, and computational approaches to strategy.

Stock Valuation using Discounted Cash Flow Method with Free Cash Flow to Equity and Relative Valuation Approaches on State-Owned Banks Listed on IDX for 2021 to 2025 Period Projection

This study aims to project the intrinsic value of state-owned banks listed on IDX for the 2021 to 2025 projection. This study uses the Discounted Cash Flow (DCF) method with the Free Cash Flow to Equity (FCFE) approach specifically for banks by looking at the regulatory capital. Meanwhile, it is also used the Relative Valuation method with the Price to Book Value (PBV) and Price Earnings Ratio (PER) approaches. This study uses three scenarios will be used, which consist of a pessimistic scenario (the average condition of the industry), a moderate scenario (the same condition as the company's growth), and an optimistic scenario (a condition above industry growth), which aims to project the stock value over the next five years. The data used in this study comes from historical data during the 2016 to 2020 period. Based on the results, the stock prices of state-owned banks using the FCFE method shows undervalued results for all scenarios. Meanwhile, using the relative valuation method, PBV in the optimistic scenario only shows BBNI undervalued conditions. In addition, in moderate and pessimistic scenarios, only BBRI shows overvalued conditions. Furthermore, PER shows undervalued results for all scenarios.

IDENTIFIKASI FAKTOR-FAKTOR YANG MEMPENGARUHI NILAI PROPERTI RESIDENSIAL BERDASARKAN PERSEPSI PENILAI PEMERINTAH

State asset management is conducted in a transparent and accountable manner. One notable requirement that has to be met is the value of the assets. Such value is estimated by a qualified government valuer based on certain valuation approaches. This process normally carries a degree of subjectivity. This research uses statistical procedures to identify property attributes that significantly affect residential property value based on the government valuers’ perception. For this purpose, a set of questionnaires was distributed to government valuers who are part of the Directorate General of State Assets Management (DGSAM). These questionnaires contained property attributes identified from the literatures and validated by several property valuers at the DGSAM and PKN STAN. There were 285 valuers who provided their responses in this research, which was slightly higher than the anticipated number of participants. Further analysis from these responses shows that non-structural property attributes, one that are not directly related to property physical attributes, are indicated to be more significant in affecting residential property value. This research however only involves DGSAM’s valuers and thus, is rather limited in nature. The results reported in this paper as such should be interpreted accordingly

The role of choice experiments in natural capital accounting approaches: fast track versus simulated exchange value in the Deben Estuary saltmarshes

Natural capital accounting requires exchange rather than welfare values, but lack of data and standards have encouraged practitioners to use different approaches (e.g. simple lookup table vs spatial modeling approaches). In this paper, we demonstrate how choice modeling data can provide simulated exchange values which are more robust than simple (fast track) valuation approaches for natural capital accounting. A survey of East of England residents collected the preferences for saltmarsh management and simulated exchange values, coherently linked with the ecosystem conditions. This approach is more informative for environmental local planning purposes. We claim that expanding the set of tools available for natural capital accounting can enhance management of ecosystem services and policy decision making.

A Non-Market Valuation Approach to Environmental Cost-Benefit Analysis for Sanitary Landfill Project Appraisal

Extensive non-engineered landfilling practice in developing countries has raised environmental concerns, but operating a sanitary landfill appears infeasible due to financial incapability. This study aims to determine the feasibility of a sanitary landfill project by including its environmental values into the project appraisal while simultaneously applying three policy-relevant methods—non-market valuation, benefits transfer, and cost-benefit analysis—in two study areas in Peninsular Malaysia. The non-market valuation study used choice modeling, a questionnaire-based technique, to elicit willingness to pay among 624 households toward the environmental attributes of the sanitary landfill. Their responses resulted in the monetary values of the environmental attributes by referring to implicit prices of leachate discharge, bad odor, disease vector and view. The implicit prices of bad odor (RM2.29 per month) and view (RM3.59 per month) in the two study areas were transferable and used as a proxy of additional solid waste disposal payment in environmental cost-benefit analysis. Positive net present value offers empirical evidence of the feasibility of the sanitary landfill project. The findings show that the inclusion of environmental values in project appraisals increases the chances of implementing sanitary landfills, providing a new approach to address the environmental concerns in developing countries. Future research should consider the external costs along with the external benefits to allow for a comprehensive comparison between environmental values in environmental cost-benefit analysis.

Patent Valuation Using Citations: A Review and Sensitivity Analysis

Abstract As a result of studies demonstrating a correlation between a patent’s value and its forward citation count, patent valuation using forward citations has been increasingly used by practitioners when a patent’s value has not been otherwise established. Although potential limitations of patent citation analysis have been discussed in the past, there is little empirical research demonstrating the sensitivity of estimated patent values to various assumptions embedded within the method. We first summarize an approach that has been used by prior practitioners to estimate the relative value of patents within a portfolio using forward citations, and then perform various analyses to investigate the sensitivity of the approach to certain assumptions. We find that some concerns of prior literature are well-founded, while others are less so. For example, we confirm that biased valuations will result from failure to properly control for patent age and technology. Our analysis also finds that truncation bias is a problem when analyzing recently issued patents, which confirms findings from existing literature. We estimate the rate at which such truncation bias dissipates as patents age and find that the bias for the median patent is reduced to below 10% within five years from the date of publication, although additional variation can remain on an individualized level. Regarding the issue of self-citations, we find that the valuation approach using forward citation analysis can be (but is not always) sensitive to the issue of self-citations, with a median difference of 16.8%. Finally, the valuation approach using forward citation analysis appears to be robust to assumptions underlying patent cohort construction.

Family Business in the Digital Age: The State of the Art and the Impact of Change in the Estimate of Economic Value

Throughout the review of the most relevant literature on family businesses and business valuation, this work pursues a twofold purpose: to explore the possible evolutionary scenarios of family businesses in the era of digitalisation, highlighting their role and purpose; and to determine the valuation approaches that may be applied to them, also in light of the different role that intangible assets deriving from their digitalisation may assume. Therefore, after a description of the most relevant changes related to the digital transformation of the FB, the focus will be set on their valuation, paying special attention to the choice of the most appropriate methodology for “grasping” the aforementioned changes. Family businesses, in fact, due to their distinctive traits and the various estimation opportunities, require a dynamic business valuation process that has to be projected into the future and suitable for estimating those intangible assets that strongly characterise these types of companies, inasmuch as they are related to the implicit components that are strongly connected to the ownership and are a result of knowledge, strategic adaptability, and product innovation, and their possible impact on the risks and their expected flows. Thus, throughout a systematic literature review, the study provides, on the one hand, a clearer representation of the state of the art of the FB valuation in the digital age; on the other hand, it highlights the characteristics and peculiarities of “novel” FBs whose valuation needs to be conducted with due care.

Strategic Adaptive Leadership and Emerging Approaches to Online Marketing of a US Small Business Real Estate Firm in Response to COVID-19

The COVID-19 pandemic has changed the business dynamics for many organizations globally. This paper examines the demonstration of adaptable strategic leadership and marketing towards online and digital marketing approaches of a newly developed waterfront high rise condominium complex. As a result of COVID-19, business sales projections are off by 85%. This paper explores organizational development intervention practitioner-based applied qualitative action research that makes recommendations on the most resourceful options in which small businesses can attract customers and boost sales even with the pandemic. For this case study, the name Moreso, a fictitious name, will be used to respect the organization that provided the data used and approved the ability to publish these findings' privacy and intellectual capital. This research approach's value in this instance is built on the reality that many similar small businesses in the real estate industry experience these same dynamics because of COVID-19 but have no starting framework on how to respond.

Tarım İşletmelerinde Bahçe Bitkileri Üretim Faaliyetlerinin TMS 41 e Göre Muhasebeleştirilmesi

Agriculture has always held its value an important sector for providing nutrition and accommodation for people and input for other sectors as well as creating employment and financial value in the market. Accounting practises in agriculture has gained importance over the past years because of the increasing number of the commercial business in agriculture sector. Agricultural activities consist of livestock and farm products. The Agricultural Activities Standard (TAS 41), which regulates the transactions occurring in agricultural activities, adopts a fair valuation approach for the valuation of biological assets and agricultural products. In the prepared study, the study was conducted with the case study method in the qualitative research method branch from the scientific research method. The agricultural enterprise subject to the research continues its greenhouse activities in the province of Van. The transactions made from the planting of the tomatoes produced in the greenhouse to the harvesting and during the sales are made in accordance with the framework of IAS 41. The accounting records made in the study were made in accordance with the new account draft in accordance with the Financial Reporting Standards prepared by the Public Oversight Accounting and Auditing Standards Authority (KGK) in September 2018.

On the definition of fair value for purposes of IFRS

Subject. This article discusses the issue of defining the Fair Value concept, its similarity and identification with the concept of Market Value. It examines the specifics of each particular value, defines the concept of Fair Value, and analyzes approaches (methods) of fair value valuation, clarifies existing problems of determining fair value for the purposes of IFRS application. Objectives. The article aims to define the notion of Fair Value and appropriate use in accounting, as well as explore approaches to assess fair value. Methods. For the study, we used a comparative analysis. Results. The article says of many inconsistencies in the valuation of fair value, starting with the lack of a clear definition of fair value in IFRS, which is actually identified with the concept of market value. It proposes a refined definition of fair value and identifies fundamental differences between fair and market values, which are based on the procedures used in their assessment. Conclusions. Fair and market values are two different types of valuation. Fair value can be the same as market value, but only if there is an active market available. There is no single concept of Fair Value presented in scientific and special literature. The same approaches are used in fair (IFRS) and market (valuation standards) assessments, but the methods described for each approach are not always the same.

An economic valuation technique identified different inpatient care experience as priorities for older Canadians than a traditional approach

ObjectivesTo (1) estimate the relative value of older adults’ healthcare experiences based on the Canadian Patient Experience Survey for Inpatient Care (CPES-IC) using an economic valuation technique, and (2) compare the results with those of a conventional key-driver analysis of healthcare experiences based on bivariate correlations. Study Design and SettingAn online survey of 1,074 Canadians aged 60 and older who had been hospitalized within five years. Participants completed the CPES-IC and a best-worst scaling (BWS) valuation task. BWS data were analyzed using a conditional logit model. These results were compared to a conventional key-driver analysis that estimates importance through Spearman's correlations between experiences and a global rating of overall experience. ResultsThe valuation approach found that the three experiences most valued by patients were: that staff seemed informed and up-to-date about their hospital care, doctors explained things in a way that they could understand, and that they got all the information they needed about their care and treatment. Three of the top five most valued experiences from the valuation approach were among the top five in the key driver analysis. However, there were noteworthy differences in rank order. ConclusionThe results of the valuation exercise can inform local and/or system level quality improvement efforts by identifying priorities from an economic evaluation point of view, which are different than those based on a conventional key-driver analysis. Given the degree of uncertainty in estimates both the rank order and confidence intervals should be used to guide decision-making.

Межкультурные коммуникации и столкновение идеологий в эпоху глобализма

The article is devoted to the problems of intercultural communication in the era of globalization. The possibilities of dialogue and communication in the context of opposition to the theory of globalism, national ideology and national values are considered. The paper analyzes the opportunity of the existence of the so-called "universal" values, the potential of their combination and coexistence with traditional and national values. The article substantiates the interference in the affairs of other states of safe democratic values, leads not only to a poor standard of living of these states but also to the denial of the very idea of "democracy". In modern conditions of economic and, above all, financial globalization, the social self-determination of states, their elaboration of sustainable development goals and means of achieving them, will play an important role. This is the task of ideology, which must be rationally substantiated before its concrete implementation. Only in this case fruitful communication and dialogue between countries are possible.
 The paper points out that the very concept of "globalization" is often interpreted in completely different ways, there is no scientific approach to its measurement. The national idea, however, cannot rely on abstractions that cannot be realized with the benefit of society. The paper concludes that the clash of civilizations and ideological rapprochement are temporary phenomena and, although multidirectional, but also mutually conditioned. It is on this basis that intercultural communication between states and representatives of different civilizations should be built, even despite the differences in valuation approaches.

Rapid economic valuation of ecosystem services in man and biosphere reserves in Africa: A review

Ecosystem services (ESs) include the benefits people receive from ecosystems that support the socio-economic requirements and human well-being. The Man and Biosphere (MAB) programs are a scientific plan in the African context that is linked to governments and attempts to create a systematic ground to enhance the relationship between individuals and their environments. Using economic valuation methods, the main objective of this study was to perform a systematic review on studies undertaken in African countries in order to expose the role of MAB programs in conserving ESs in these countries. Based on the results, MAB programs offer both the protection of cultural ecosystem services and the improvement of livelihoods. Moreover, the MAB programs enable biosphere reserves to help national governments find solutions to the pressing challenges in Africa. In conclusion, policymakers should be aware of the main goal of ESs valuation approaches. In other words, the main goal should focus on the creation of prevention rather than rehabilitation activities in order to avoid the loss of ecosystem services mainly at the cost of users. Overall, the findings of this study underlined that economic valuation methods should provide evidence to underpin the development of policy instruments for the conservation of ESs in African countries. More importantly, ESs conservation strategies should consider various measures to reduce human impacts while also considering their well-being. In this context, the study's main implication is that human well-being is determined not only by the quantity but also by the quality of ESs.

Value Maximizing Decisions in the Real Estate Market: Real Options Valuation Approach

The real estate market of EU countries has undergone a severe global financial crisis 2008–2009, recovered successfully later, and now experiencing significant uncertainty due to the COVID-19 pandemic event. Significant volatility of the real estate business is once again evident, just as it was following the global financial crisis. The paper aims to provide a case study of a real estate project by giving insight into the Latvian real estate project that had been experiencing similar economic uncertainty, to demonstrate hybrid real options valuation (ROV) method to adapt real estate investments to changing circumstances and to develop the decision-making solution to similar EU real estate problems during the pandemic. The paper provides the “step-by-step” ROV application’s methodology in real estate development projects. The presented methodology is a powerful managerial risk management tool for the executives of similar real estate development projects in the EU countries struggling to make investment decisions in the pandemic and post-pandemic period. Since any estimation includes assumptions, ROV results should be interpreted and perceived as approximations only. The future works can provide robust ROV analyses and interpretations regarding the demand for real estate, showing quantitatively how competition can impact strategic investment decisions.

Operationalisation of ecosystem services in support of ecosystem-based marine spatial planning: insights into needs and recommendations

Marine or maritime spatial planning (MSP) works across borders and sectors to ensure human activities at sea take place in an efficient and sustainable way. The ecosystem service (ES) concept links ecosystem functioning to human wellbeing and has emerged as a potential framework supporting MSP, as it can be used to link different sectorial and environmental policies. However, due to the complexity of the marine realm, mapping and assessment of ES is still in its infancy and there remains a need to develop and agree upon the appropriate progress in ES development to support MSP. This contribution highlights research needs and recommendations to advance the operationalization of the ES concept into MSP. We apply a mixed method approach combining literature research and expert knowledge derived from 14 case studies, to address current status and prospects of ES application in MSP. We present nine main needs dealing with (i) improvement and adaptation of existing ES frameworks and classifications to the marine realm and (ii) definition of an indicator pool; (iii) methodological and technical developments to support data availability and accessibility; (iv) advances in mapping and modelling methods; (v) improvements in assessment and valuation approaches; (vi) further use of scenario and trade-off analysis; (vii) taking advantage of supporting Information Technologies (IT); (viii) improvements in communication and engagement with stakeholders; and (ix) further work for the integration of ES knowledge into policies and for supporting management and MSP. The manuscript concludes with a set of recommendations to foster the operationalization of the ES concept into MSP.

PIN13 Cost-Minimization Analysis of Introducing Hexaxim® into Korean National Immunization Program

Multivalent vaccines have brought public health and economic benefits by covering new antigens without increasing the number of injections. A fully liquid hexavalent vaccine, Hexaxim® (DTaP-IPV-Hib-HepB) has been approved in Korea with proven immunogenicity and safety compared to pentavalent DTaP-IPV/Hib co-administered with standalone Hep B vaccine. This research aims to evaluate the socio-economic impact of introducing Hexaxim® in Korean national immunization program (NIP). A cost-minimization analysis was performed with a societal perspective over a 1-year time horizon. Vaccines acquisition, administration, immunization error related costs, parents’ transportation and time costs were considered in the model. The probabilities of immunization error were obtained from Time and Motion study, which showed that a fully liquid vaccine significantly reduced the preparation time and resulted in fewer immunization errors. Data on birth cohort, vaccine coverage rate, transportation cost and hourly gross wage were collected from official national sources. In order to obtain the number of hospital visits for inoculation, a nationwide online market research (N=400) was carried out in August 2020. Parents’ time costs were estimated by Opportunity Cost Methods, but different approaches also explored in the sensitivity analysis. If Korea switches from the current pentavalent DTaP-IPV/Hib plus HepB to Hexaxim® for NIP, it will provide 33.2 billion KRW (=29 million USD) substantial cost-savings over the coming year. This was mainly attributable to parents’ time savings by reducing hospital visits. Reducing transportation, inoculation fee and immunization errors were also contributing factors. Sensitivity analyses indicated that results were robust to the different valuation approaches. Our research demonstrates the socio-economic value of Hexaxim® beyond clinical evidences. Additional practical benefits of Hexaxim® such as reducing storage, distribution and preparation steps, which were not fully captured in this analysis, could be considered from HCP’s perspectives. These results would support evidence-based decision-making on the introduction of Hexaxim® in Korea NIP.

Valuation inaccuracy, approaches, basis and procedures for judgment execution in Ethiopia

PurposeThe causes of valuation inaccuracy, the approaches, basis and procedures used for value estimation were not profoundly identified in Ethiopia. Particularly, the causes of property valuation inaccuracy for court decisions have not been assiduously studied by scholars. Hence, the ultimate goal of this study aims to identify the determinant variables of valuation inaccuracy, the approaches, basis and procedures used for court execution purposes.Design/methodology/approachThis study employed both qualitative and quantitative approaches. The target populations of the study were the courts at the federal and regional levels. A purposive sampling technique was employed to undertake this study. The survey data was analyzed using the Relative Importance Index (RII).FindingsThe finding of this research revealed that courts have not outshined and uniform valuation manuals and guidelines that clearly state the approaches, procedures and bases of valuation. As a consequence, courts execute based on the opinion of value determined by other institutions. The insignificant numbers of independent valuation institution with the lack of uniform standards in the country prejudice the implementation of the decision of the court and faced injustice. The finding also reveals as there are several causative variables for real property valuation inaccuracy.Practical implicationsTo alleviate the problem, the government should strengthen the valuation sector by creating an independent institution for advancing valuation regulation and policymaking.Originality/valueThis study was the first of all and could be a pointer for different government and non-government bodies regarding the limitations of valuation for judgment execution purposes.

How to Value Private Companies using Multiples and Discounted Cash Flow Analysis

In this paper we outline how to value private companies and work through a real case study. The corporate finance and valuation techniques on display can be used to value any private company or project that is illiquid with little or no market data. Together with this paper we provide the full background information for the case study, including consolidated balance sheet, cash flow and income statements and an Excel workbook with a full valuation breakdown . Two valuation approaches are presented. The first approach is called ‘multiples’ and requires we first identify sensible comparable companies with public data and can serve as a reasonable proxy for our underlying firm or project. Known proxy enterprise values are converted into multiples of EBITDA and extrapolated to value the private company or project of interest. Enterprise value can be measured as a multiple of sales, earnings, EBITDA, EBIAT and many income factors. Typically practitioners measure enterprise value as a multiple of EBITDA to exclude sales margin, capital structure, debt and leverage and other idiosyncratic biases. The second valuation method takes a discounted cash flow (DCF) approach. This approach is forward looking; it projects and values the future cash flows of a company. This method lends itself to richer analysis compared to the multiples approach, but relies heavily on assumptions surrounding cash flow projections, growth rates and the weighted average cost of capital (WACC). The WACC acts as a yield or discount factor and is required to value the cash flows of the firm or project (Burgess, 2020). Finally we compare the prices from several different approaches to arrive at a suitable price range. It is important to note that all approaches involve assumptions and approximations of some kind. Therefore practitioners seek to establish a reasonable price range rather than a single price. Transactions however must take place at a single price and law suits are a popular commonplace negation tactic to squeeze for additional value.

Defining the Fair Value concept for IFRS application

Subject. This article discusses the issue of defining the Fair Value concept, its similarity and identification with the concept of Market Value. It examines the specifics of each particular value, defines the concept of Fair Value, and analyzes approaches (methods) of fair value valuation, clarifies existing problems of determining fair value for the purposes of IFRS application. Objectives. The article aims to define the notion of Fair Value and appropriate use in accounting, as well as explore approaches to assess fair value. Methods. For the study, we used a comparative analysis. Results. The article says of many inconsistencies in the valuation of fair value, starting with the lack of a clear definition of fair value in IFRS, which is actually identified with the concept of market value. It proposes a refined definition of fair value and identifies fundamental differences between fair and market values, which are based on the procedures used in their assessment. Conclusions. Fair and market values are two different types of valuation. Fair value can be the same as market value, but only if there is an active market available. There is no single concept of Fair Value presented in scientific and special literature. The same approaches are used in fair (IFRS) and market (valuation standards) assessments, but the methods described for each approach are not always the same.

Valuation of health losses of women with multiple roles using a well-being valuation approach: Evidence from Japan.

Unpaid housework among married working couples is largely done by women in Japan, causing health losses due to work-to-family conflict. However, monetary values for the poor health condition of working mothers with multiple roles have not been explored. The purpose of this study is to examine the impacts of health conditions on life satisfaction (LS) among middle-aged Japanese men and women and attach a monetary value to self-assessed poor health (SAPH). The well-being valuation approach applied monetary values to health losses among middle-aged working persons, using a total of 6,779 married workers drawn from a nationwide 6 wave (2007, 2009, 2011–2014) longitudinal data from the Japanese Life Course Panel Survey of Middle-aged Persons. Female workers having multiple roles as employees and housewives, who spent at least 35 hours per week on market work are defined as women with multiple roles. LS was used as a proxy of individuals’ subjective well-being. Considering the endogeneity between SAPH and LS, I used the two-stage residual inclusion approach with generalized residuals. Major findings are (1) health losses of women with multiple roles were 1.47 times of the equivalent household income; larger than those of men with multiple roles, and (2) health losses of women with multiple roles can be reduced by around 9.5% of the equivalent household income if the spouse shares the housework by engaging in frequent cleaning of the house. Taking health losses of women with multiple roles into consideration, middle-aged men should reconsider the allocation of work attributable to the attitudes toward gender roles.