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Knowledge on Company Valuation: Awareness of Disparity Between Market and Fundamental Values

Aleš Trunk and Igor Stubelj
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Aleš Trunk: Geodetic Institute of Slovenia, Slovenia
Igor Stubelj: University of Primorska, Slovenia

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Abstract: In this paper we present the case of Slovenian public limited companies based on the discounted free cash flows to equity and comparing it with market value of equity capital of companies before and during the financial-economic crisis. The purpose of this paper is to discuss the equity value of companies, as well as present the importance of fair and honest company valuations. The fundamental value of equity capital of a company is important for both management and external shareholders. The wide disparity between market and fundamental values can lead to high value adjustments, which reduces investors confidence in the capital market. This has had a negative impact on the operations of financial institutions, and individual as well as company investment; especially on developing financial markets during a financial-economic crisis. This paper shows the problem of company valuation on small and emerging capital markets which have a short history of data.

Keywords: market and fundamental values of equity; knowledge; fair and honest company valuations; Slovenian public limited companies; management (search for similar items in EconPapers)
Date: 2013
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