Patrick Anderson
- Published in print:
- 2013
- Published Online:
- September 2013
- ISBN:
- 9780804758307
- eISBN:
- 9780804783224
- Item type:
- book
- Publisher:
- Stanford University Press
- DOI:
- 10.11126/stanford/9780804758307.001.0001
- Subject:
- Economics and Finance, Financial Economics
For decades, the traditional approaches to business valuation (market, asset, and income) have taken center stage in the assessment of the firm. This book presents an expanded valuation toolkit, ...
More
For decades, the traditional approaches to business valuation (market, asset, and income) have taken center stage in the assessment of the firm. This book presents an expanded valuation toolkit, consisting of nine well-defined valuation principles hailing from the fields of economics, finance, accounting, taxation, and management. It ultimately argues that the “value functional” approach to business valuation avoids most of the shortcomings of its competitors, and more correctly matches the actual motivations and information held by stakeholders. To remedy the shortcomings of existing theory, the author proposes a new definition of the firm that is consistent with the principle that entrepreneurs maximize value, not profit.Less
For decades, the traditional approaches to business valuation (market, asset, and income) have taken center stage in the assessment of the firm. This book presents an expanded valuation toolkit, consisting of nine well-defined valuation principles hailing from the fields of economics, finance, accounting, taxation, and management. It ultimately argues that the “value functional” approach to business valuation avoids most of the shortcomings of its competitors, and more correctly matches the actual motivations and information held by stakeholders. To remedy the shortcomings of existing theory, the author proposes a new definition of the firm that is consistent with the principle that entrepreneurs maximize value, not profit.
Patrick L. Anderson
- Published in print:
- 2013
- Published Online:
- September 2013
- ISBN:
- 9780804758307
- eISBN:
- 9780804783224
- Item type:
- chapter
- Publisher:
- Stanford University Press
- DOI:
- 10.11126/stanford/9780804758307.003.0009
- Subject:
- Economics and Finance, Financial Economics
The author introduces the “recursive” model that has emerged within micro-economics over the past few decades. This modern recursive equilibrium model is contrasted with the neoclassical model, in ...
More
The author introduces the “recursive” model that has emerged within micro-economics over the past few decades. This modern recursive equilibrium model is contrasted with the neoclassical model, in terms of the optimization and time periods involved. The modern, multi-period consumer savings problem is introduced, as well as the “cake eating” problem and basic pricing equation. The author argues these form the basis of a modern microeconomic theory, and that the stochastic discount factor that emerges from the basic pricing equation provides a valuable insight that is lacking in the neoclassical and classical worlds. As with other valuation principles, the author tests the principle as a practical valuation tool for three actual businesses, demonstrating that is provides an incomplete basis for valuation of private firms.Less
The author introduces the “recursive” model that has emerged within micro-economics over the past few decades. This modern recursive equilibrium model is contrasted with the neoclassical model, in terms of the optimization and time periods involved. The modern, multi-period consumer savings problem is introduced, as well as the “cake eating” problem and basic pricing equation. The author argues these form the basis of a modern microeconomic theory, and that the stochastic discount factor that emerges from the basic pricing equation provides a valuable insight that is lacking in the neoclassical and classical worlds. As with other valuation principles, the author tests the principle as a practical valuation tool for three actual businesses, demonstrating that is provides an incomplete basis for valuation of private firms.
