The Choice of Valuation Techniques in Practice: Education versus Profession

Lilia Mukhlynina and Kjell Nyborg
Additional contact information
Lilia Mukhlynina: University of Zurich - Department of Banking and Finance

No 16-36, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We use a survey approach to learn about valuation professionals’ choices and implementations of valuation techniques in practice. The survey design allows us to control for a respondent’s professional subgroup (e.g., consulting), education, experience, and valuation purpose characteristics. We find support for the “sociological hypothesis” that profession matters more than education; different professions have different valuation cultures. Other factors are less important. There are also many commonalities across respondents. Most use both multiples and DCF, but implement DCF in a way that almost turns it into a multiples exercise. Confusion reigns with respect to interest tax shields and the WACC. Higher educational levels do not reduce the confusion. Our overall findings matter because valuation professionals function as intermediaries in the capital allocation process. The relative unimportance of education raises questions about the role and benefit of higher level finance education.

Keywords: Valuation; Valuation Cultures; Sociological Hypothesis; Multiples; DCF; Finance Education (search for similar items in EconPapers)
JEL-codes: A11 A14 A20 G02 G24 G31 G32 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2016-04
New Economics Papers: this item is included in nep-edu
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://ssrn.com/abstract=2784850 (application/pdf)

Related works:
Journal Article: The Choice of Valuation Techniques in Practice: Education Versus Profession (2020)
Working Paper: The Choice of Valuation Techniques in Practice: Education versus Profession (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1636

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().