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The Choice of Valuation Techniques in Practice: Education Versus Profession

Lilia Mukhlynina and Kjell Nyborg ()

Critical Finance Review, 2020, vol. 9, issue 1-2, 201-265

Abstract: We use a survey approach to learn about valuation professionals’ choices and implementations of valuation techniques in practice. Most use both multiples and discounted cash flow (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 weighted average cost of capital (WACC). Higher educational levels do not reduce the confusion. The survey design allows us to control for a respondent’s professional subgroup (e.g., consulting), education, experience, and valuation-purpose characteristics. We find that profession matters more than education; different professions have different valuation cultures. Other factors are less important. The relative unimportance of education raises questions about the role, benefit, and optimal mode of higher level finance education.

Keywords: Valuation; Survey; Sociological hypothesis; Multiples; DCF (search for similar items in EconPapers)
JEL-codes: A11 A14 A20 G02 G24 G31 G32 (search for similar items in EconPapers)
Date: 2020
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Related works:
Working Paper: The Choice of Valuation Techniques in Practice: Education versus Profession (2016) Downloads
Working Paper: The Choice of Valuation Techniques in Practice: Education versus Profession (2016) Downloads
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