Equity Value of Slovenian Publicly Traded Companies on the Basis of Discounted Free Cash Flows, 2006–2011

Aleš Trunk and Igor Stubelj
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Igor Stubelj: University of Primorska

Management, 2013, vol. 8, issue 3, 199-218

Abstract: The purpose of the paper is to assess the equity value of Slovenian publicly traded companies, before and after financial-economic crises, on the basis of discounted free cash flows to equity and to compare it with market equity values of companies. The fundamental equity value of the selected companies (25) is calculated by a two-stage model. The method of paired-samples t-tests did not confirm the hypothesis that the fundamental value of Slovenian publicly traded companies better reflects market values currently in financial and economic crisis (2011) as before (2006). However we found out that the market equity value of companies in relation to the fundamental equity value of companies is lower in 2011 than in 2006. Fundamental value of company is important for both management, as well as external stakeholders. The wide variation in market and fundamental values are the basis for high value adjustments, which reduces confidence in the capital market. This has a negative impact on the operation of financial institutions, individual and companies investment. There are various models of the basic calculations used in the model evaluation. This study shows the problem of company valuation on small and emerging capital markets with a short history of data.

Keywords: free cash flow; equity; financial and economic crisis; management; fundamental and market value of companies (search for similar items in EconPapers)
Date: 2013
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http://www.fm-kp.si/zalozba/ISSN/1854-4231/8_267-269.pdf abstract in English (application/pdf)

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