An Improved Valuation Model for Technology Companies

Ako Doffou
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Ako Doffou: The Institute of International Studies, Ramkhamhaeng University, Bangkok 10240, Thailand

IJFS, 2015, vol. 3, issue 2, 1-15

Abstract: This paper estimates some of the parameters of the Schwartz and Moon (2001)) model using cross-sectional data. Stochastic costs, future financing, capital expenditures and depreciation are taken into account. Some special conditions are also set: the speed of adjustment parameters are equal; the implied half-life of the sales growth process is linked to analyst forecasts; and the risk-adjustment parameter is inferred from the company’s observed stock price beta. The model is illustrated in the valuation of Google, Amazon, eBay, Facebook and Yahoo. The improved model is far superior to the Schwartz and Moon (2001) model.

Keywords: valuation; cross-sectional data; stochastic costs; speed of adjustment; implied half-life; risk-adjustment parameter (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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