David B. Audretsch and Albert N. Link
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199730377
- eISBN:
- 9780199932795
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199730377.001.0001
- Subject:
- Business and Management, Innovation
The number of new small closely held business start-ups, which may be referred to as entrepreneurial enterprises, is growing and they continue to be the primary source for employment growth in the ...
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The number of new small closely held business start-ups, which may be referred to as entrepreneurial enterprises, is growing and they continue to be the primary source for employment growth in the United States and in most industrialized nations. However, the topic of the valuation of an entrepreneurial enterprise has for the most part been ignored because, in the view of many, traditional valuation methods are not applicable. This is because entrepreneurial enterprises do not have a history of sales and revenues upon which traditional valuation methods are built. Through conceptual discussions and numerical examples a more accurate method for dealing with the valuation issues that are relevant to an entrepreneurial enterprise is suggested.Less
The number of new small closely held business start-ups, which may be referred to as entrepreneurial enterprises, is growing and they continue to be the primary source for employment growth in the United States and in most industrialized nations. However, the topic of the valuation of an entrepreneurial enterprise has for the most part been ignored because, in the view of many, traditional valuation methods are not applicable. This is because entrepreneurial enterprises do not have a history of sales and revenues upon which traditional valuation methods are built. Through conceptual discussions and numerical examples a more accurate method for dealing with the valuation issues that are relevant to an entrepreneurial enterprise is suggested.
John Kay
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198292227
- eISBN:
- 9780191596520
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198292228.003.0009
- Subject:
- Economics and Finance, Microeconomics
Discussing the irrelevance of corporate finance to firm valuation, this chapter provides support for the assertion that the profitability of a business can only be the result of its underlying ...
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Discussing the irrelevance of corporate finance to firm valuation, this chapter provides support for the assertion that the profitability of a business can only be the result of its underlying competitive advantage.Less
Discussing the irrelevance of corporate finance to firm valuation, this chapter provides support for the assertion that the profitability of a business can only be the result of its underlying competitive advantage.
Olivia S. Mitchell
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0001
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
Pension systems are a central component of the compensation package for workers in virtually every developed nation, and nowhere are they more important than for public sector employees. The growth ...
More
Pension systems are a central component of the compensation package for workers in virtually every developed nation, and nowhere are they more important than for public sector employees. The growth of public pensions has spurred a hot debate of late, since some private sector employees envy their public sector counterparts the relatively generous benefits negotiated by strong unions that traditionally represent civil servants. Also some politicians had argued that pension and health-care benefits paid to police and firefighters, schoolteachers, and other civil servants have become too expensive for the public purse, especially when benefits have been cut in the private sector And the costs of maintaining public sector pension plans have come under the microscope of late, as municipalities, states, and other governmental units facing difficult financial times and volatile capital markets realize they must cut corners. This volume takes up these and other themes pertinent to the future of public employee retirement systems around the world.Less
Pension systems are a central component of the compensation package for workers in virtually every developed nation, and nowhere are they more important than for public sector employees. The growth of public pensions has spurred a hot debate of late, since some private sector employees envy their public sector counterparts the relatively generous benefits negotiated by strong unions that traditionally represent civil servants. Also some politicians had argued that pension and health-care benefits paid to police and firefighters, schoolteachers, and other civil servants have become too expensive for the public purse, especially when benefits have been cut in the private sector And the costs of maintaining public sector pension plans have come under the microscope of late, as municipalities, states, and other governmental units facing difficult financial times and volatile capital markets realize they must cut corners. This volume takes up these and other themes pertinent to the future of public employee retirement systems around the world.
David B. Audretsch and Albert N. Link
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199730377
- eISBN:
- 9780199932795
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199730377.003.0009
- Subject:
- Business and Management, Innovation
This chapter completes the book with a concluding statement about the need for valuation methods related to an entrepreneurial enterprise.
This chapter completes the book with a concluding statement about the need for valuation methods related to an entrepreneurial enterprise.
López Ramón and Michael A. Toman
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199298006
- eISBN:
- 9780191603877
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199298009.003.0014
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Tropical forest conservation and sustainable natural forest management both imply benefits and invoke considerable costs. The spatial and temporal mismatch of such benefits (which might not ...
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Tropical forest conservation and sustainable natural forest management both imply benefits and invoke considerable costs. The spatial and temporal mismatch of such benefits (which might not materialize until far in the future and could be shared by many parties) and costs (which often occur at a local scale and must be borne in the short term) prevents an efficient forest management at the national level. While the international community has developed a variety of instruments to align global and national incentives, the implementation of such policies needs to take into account national property right regimes and the recent trend towards the devolution of rights and responsibilities to communities and private individuals, which has a significant impact on the relative importance of different types of market failures and policy effects. This paper summarizes existing literature on the causes of deforestation and the magnitude of various forest benefit components, discusses the usefulness of forest valuation exercises for guiding policy choices regarding forest management and conservation, and highlights the key role of market failure in tropical forest conservation. It explores the various policy options that exist for the rest of the world to address market failure, and concludes with conditions necessary for improving current systems.Less
Tropical forest conservation and sustainable natural forest management both imply benefits and invoke considerable costs. The spatial and temporal mismatch of such benefits (which might not materialize until far in the future and could be shared by many parties) and costs (which often occur at a local scale and must be borne in the short term) prevents an efficient forest management at the national level. While the international community has developed a variety of instruments to align global and national incentives, the implementation of such policies needs to take into account national property right regimes and the recent trend towards the devolution of rights and responsibilities to communities and private individuals, which has a significant impact on the relative importance of different types of market failures and policy effects. This paper summarizes existing literature on the causes of deforestation and the magnitude of various forest benefit components, discusses the usefulness of forest valuation exercises for guiding policy choices regarding forest management and conservation, and highlights the key role of market failure in tropical forest conservation. It explores the various policy options that exist for the rest of the world to address market failure, and concludes with conditions necessary for improving current systems.
Brett M. Frischmann
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199895656
- eISBN:
- 9780199933280
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199895656.001.0001
- Subject:
- Law, Environmental and Energy Law
Infrastructure resources are the subject of many contentious public policy debates, including what to do about crumbling roads and bridges, whether and how to protect our natural environment, energy ...
More
Infrastructure resources are the subject of many contentious public policy debates, including what to do about crumbling roads and bridges, whether and how to protect our natural environment, energy policy, even patent law reform, universal health care, network neutrality regulation, and the future of the Internet. Each of these involves a battle to control infrastructure resources, to establish the terms and conditions under which the public receives access, and to determine how the infrastructure and various dependent systems evolve over time. This book pays much needed attention to understanding how society benefits from infrastructure resources and how management decisions affect a wide variety of interests. The book links infrastructure, a particular set of resources defined in terms of the manner in which they create value, with commons, a resource management principle by which a resource is shared within a community. The infrastructure commons ideas have broad implications for scholarship and public policy across many fields ranging from traditional infrastructure like roads to environmental economics to intellectual property to Internet policy. Economics has become the methodology of choice for many scholars and policymakers in these areas. The book offers a rigorous economic challenge to the prevailing wisdom, which focuses primarily on problems associated with ensuring adequate supply. The book explores a set of questions: what drives the demand side of the equation, and how should demand-side drivers affect public policy? Demand for infrastructure resources involves a range of important considerations that bear on the optimal design of a regime for infrastructure management. The book identifies resource valuation and attendant management problems that recur across many different fields and many different resource types, and it develops a functional economic approach to understanding and analyzing these problems and potential solutions.Less
Infrastructure resources are the subject of many contentious public policy debates, including what to do about crumbling roads and bridges, whether and how to protect our natural environment, energy policy, even patent law reform, universal health care, network neutrality regulation, and the future of the Internet. Each of these involves a battle to control infrastructure resources, to establish the terms and conditions under which the public receives access, and to determine how the infrastructure and various dependent systems evolve over time. This book pays much needed attention to understanding how society benefits from infrastructure resources and how management decisions affect a wide variety of interests. The book links infrastructure, a particular set of resources defined in terms of the manner in which they create value, with commons, a resource management principle by which a resource is shared within a community. The infrastructure commons ideas have broad implications for scholarship and public policy across many fields ranging from traditional infrastructure like roads to environmental economics to intellectual property to Internet policy. Economics has become the methodology of choice for many scholars and policymakers in these areas. The book offers a rigorous economic challenge to the prevailing wisdom, which focuses primarily on problems associated with ensuring adequate supply. The book explores a set of questions: what drives the demand side of the equation, and how should demand-side drivers affect public policy? Demand for infrastructure resources involves a range of important considerations that bear on the optimal design of a regime for infrastructure management. The book identifies resource valuation and attendant management problems that recur across many different fields and many different resource types, and it develops a functional economic approach to understanding and analyzing these problems and potential solutions.
Wilfred Beckerman and Joanna Pasek
- Published in print:
- 2001
- Published Online:
- November 2003
- ISBN:
- 9780199245086
- eISBN:
- 9780191598784
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199245088.003.0001
- Subject:
- Political Science, Environmental Politics
During the last two or three decades, various developments in the environmental sphere have led to increasing concern with our obligations to posterity and to the non‐human part of the natural world. ...
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During the last two or three decades, various developments in the environmental sphere have led to increasing concern with our obligations to posterity and to the non‐human part of the natural world. These developments have exposed gaps in both traditional, moral, and political theory and in conventional economics. Environmental issues have exposed these gaps and have brought to the fore questions such as how far the society, with whose welfare we are concerned, includes future generations or is limited to individual nations or human beings. This book examines these questions as well as related ethical aspects of environmental policy, such as environmental valuation or the equitable allocation among nations of the burden of environmental protection.Less
During the last two or three decades, various developments in the environmental sphere have led to increasing concern with our obligations to posterity and to the non‐human part of the natural world. These developments have exposed gaps in both traditional, moral, and political theory and in conventional economics. Environmental issues have exposed these gaps and have brought to the fore questions such as how far the society, with whose welfare we are concerned, includes future generations or is limited to individual nations or human beings. This book examines these questions as well as related ethical aspects of environmental policy, such as environmental valuation or the equitable allocation among nations of the burden of environmental protection.
Wilfred Beckerman and Joanna Pasek
- Published in print:
- 2001
- Published Online:
- November 2003
- ISBN:
- 9780199245086
- eISBN:
- 9780191598784
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199245088.003.0008
- Subject:
- Political Science, Environmental Politics
Generations are not homogeneous entities and are composed of individuals and nations that have conflicting interests in the way in which resources are allocated among competing uses. This chapter ...
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Generations are not homogeneous entities and are composed of individuals and nations that have conflicting interests in the way in which resources are allocated among competing uses. This chapter discusses whether ‘the environment’, or ‘nature’, should enjoy special status in any allocation; whether the economist's approach is too anthropocentric; the concept of ‘intrinsic’ values; and the application of these concepts to environmental valuation. It is argued that while many environmental assets are ‘public goods’, so that the free market is unlikely to supply the socially optimal amount, the same applies to many other things, such as public health or education services or the arts, not to mention the fact that most people in the world are, anyway, in dire need of a simple increase in their ability to buy simple basic private goods. This means that the allocation of resources to environmental objectives ought to take into account some form of cost‐benefit analysis.Less
Generations are not homogeneous entities and are composed of individuals and nations that have conflicting interests in the way in which resources are allocated among competing uses. This chapter discusses whether ‘the environment’, or ‘nature’, should enjoy special status in any allocation; whether the economist's approach is too anthropocentric; the concept of ‘intrinsic’ values; and the application of these concepts to environmental valuation. It is argued that while many environmental assets are ‘public goods’, so that the free market is unlikely to supply the socially optimal amount, the same applies to many other things, such as public health or education services or the arts, not to mention the fact that most people in the world are, anyway, in dire need of a simple increase in their ability to buy simple basic private goods. This means that the allocation of resources to environmental objectives ought to take into account some form of cost‐benefit analysis.
Wilfred Beckerman and Joanna Pasek
- Published in print:
- 2001
- Published Online:
- November 2003
- ISBN:
- 9780199245086
- eISBN:
- 9780191598784
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199245088.003.0009
- Subject:
- Political Science, Environmental Politics
This chapter discusses critically the main criticisms of the use of cost‐benefit analysis in environmental policy, such as the incommensurability of environmental values with the values born by ...
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This chapter discusses critically the main criticisms of the use of cost‐benefit analysis in environmental policy, such as the incommensurability of environmental values with the values born by marketable goods, and the related unreliability of estimates of peoples’ willingness to pay for environmental protection. While it is found that there is some strength in these criticisms, it is still necessary to take account of the resource constraint involved in decisions concerning public goods. Furthermore, a democratic society needs some impartial and transparent process for solving allocation problems. However, the need to reconcile the valid objections made by environmentalists to cost‐benefit analysis with the problems raised by resource constraints raises new problems of political theory and institutions.Less
This chapter discusses critically the main criticisms of the use of cost‐benefit analysis in environmental policy, such as the incommensurability of environmental values with the values born by marketable goods, and the related unreliability of estimates of peoples’ willingness to pay for environmental protection. While it is found that there is some strength in these criticisms, it is still necessary to take account of the resource constraint involved in decisions concerning public goods. Furthermore, a democratic society needs some impartial and transparent process for solving allocation problems. However, the need to reconcile the valid objections made by environmentalists to cost‐benefit analysis with the problems raised by resource constraints raises new problems of political theory and institutions.
David B. Audretsch and Albert N. Link
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199730377
- eISBN:
- 9780199932795
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199730377.003.0007
- Subject:
- Business and Management, Innovation
This chapter sets the stage for Chapter 8, in which a more complete valuation of an entrepreneurial enterprise is presented. Step-by-step valuation templates are set out as the foundation for a ...
More
This chapter sets the stage for Chapter 8, in which a more complete valuation of an entrepreneurial enterprise is presented. Step-by-step valuation templates are set out as the foundation for a generalizable methodology for valuing an entrepreneurial enterprise.Less
This chapter sets the stage for Chapter 8, in which a more complete valuation of an entrepreneurial enterprise is presented. Step-by-step valuation templates are set out as the foundation for a generalizable methodology for valuing an entrepreneurial enterprise.
Han Smit and Thras Moraitis
- Published in print:
- 2015
- Published Online:
- October 2017
- ISBN:
- 9780691140001
- eISBN:
- 9781400852178
- Item type:
- book
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691140001.001.0001
- Subject:
- Business and Management, Knowledge Management
It is widely accepted that a large proportion of acquisition strategies fail to deliver the expected value. Globalizing markets characterized by growing uncertainty, together with the advent of new ...
More
It is widely accepted that a large proportion of acquisition strategies fail to deliver the expected value. Globalizing markets characterized by growing uncertainty, together with the advent of new competitors, are further complicating the task of valuing acquisitions. Too often, managers rely on flawed valuation models or their intuition and experience when making risky investment decisions, exposing their companies to potentially costly pitfalls. This book provides managers with a powerful methodology for designing and executing successful acquisition strategies. The book tackles the myriad executive biases that infect decision making at every stage of the acquisition process, and the inadequacy of current valuation approaches to help mitigate these biases and more realistically represent value in uncertain environments. Bringing together the latest advances in behavioral finance, real option valuation, and game theory, this book explains how to express acquisition strategies as sets of real options, explicitly introducing uncertainty and future optionality into acquisition strategy design. It shows how to incorporate the competitive dynamics that exist in different acquisition contexts, acknowledge and even embrace uncertainty, identify the value of the real options embedded in targets, and more. Rooted in economic theory and featuring numerous real-world case studies, the book will enhance the ability of CEOs and their teams to derive value from their acquisition strategies, and is also an ideal resource for researchers and MBAs.Less
It is widely accepted that a large proportion of acquisition strategies fail to deliver the expected value. Globalizing markets characterized by growing uncertainty, together with the advent of new competitors, are further complicating the task of valuing acquisitions. Too often, managers rely on flawed valuation models or their intuition and experience when making risky investment decisions, exposing their companies to potentially costly pitfalls. This book provides managers with a powerful methodology for designing and executing successful acquisition strategies. The book tackles the myriad executive biases that infect decision making at every stage of the acquisition process, and the inadequacy of current valuation approaches to help mitigate these biases and more realistically represent value in uncertain environments. Bringing together the latest advances in behavioral finance, real option valuation, and game theory, this book explains how to express acquisition strategies as sets of real options, explicitly introducing uncertainty and future optionality into acquisition strategy design. It shows how to incorporate the competitive dynamics that exist in different acquisition contexts, acknowledge and even embrace uncertainty, identify the value of the real options embedded in targets, and more. Rooted in economic theory and featuring numerous real-world case studies, the book will enhance the ability of CEOs and their teams to derive value from their acquisition strategies, and is also an ideal resource for researchers and MBAs.
Han Smit and Thras Moraitis
- Published in print:
- 2015
- Published Online:
- October 2017
- ISBN:
- 9780691140001
- eISBN:
- 9781400852178
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691140001.003.0002
- Subject:
- Business and Management, Knowledge Management
It is puzzling to note that while companies seem to rush into acquisitions during global economic booms—even when they are aware of the dangers of overpaying—they appear to lose all interest in ...
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It is puzzling to note that while companies seem to rush into acquisitions during global economic booms—even when they are aware of the dangers of overpaying—they appear to lose all interest in dealing when the global economy is sluggish and the market invariably offers bargains. Deal framing in executives' analyses—the way they perceive and model their acquisition or divestment opportunities—can cause them to overestimate acquisition opportunities in hot deal markets, while their dismay in cold markets often induces them to frame deals as representing too high risk, so they hold back from making viable new acquisitions or delay divesting loss-making divisions. Decision biases can play surprisingly strong roles in the valuation analyses of even experienced executives. This chapter focuses on this particular problem: how rational analyses can become infected and lead executives to manipulate their analyses to get the answers they expect or require. It proposes a remedy that goes beyond currently applied valuation models.Less
It is puzzling to note that while companies seem to rush into acquisitions during global economic booms—even when they are aware of the dangers of overpaying—they appear to lose all interest in dealing when the global economy is sluggish and the market invariably offers bargains. Deal framing in executives' analyses—the way they perceive and model their acquisition or divestment opportunities—can cause them to overestimate acquisition opportunities in hot deal markets, while their dismay in cold markets often induces them to frame deals as representing too high risk, so they hold back from making viable new acquisitions or delay divesting loss-making divisions. Decision biases can play surprisingly strong roles in the valuation analyses of even experienced executives. This chapter focuses on this particular problem: how rational analyses can become infected and lead executives to manipulate their analyses to get the answers they expect or require. It proposes a remedy that goes beyond currently applied valuation models.
Han Smit and Thras Moraitis
- Published in print:
- 2015
- Published Online:
- October 2017
- ISBN:
- 9780691140001
- eISBN:
- 9781400852178
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691140001.003.0003
- Subject:
- Business and Management, Knowledge Management
In a period of only a few years in the early 2000s, Vodafone's then CEO Chris Gent grew the company from a small UK-based mobile operator into the world leader, with over 240 million customers. He ...
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In a period of only a few years in the early 2000s, Vodafone's then CEO Chris Gent grew the company from a small UK-based mobile operator into the world leader, with over 240 million customers. He did this via a sequence of 26 strategic transactions, including the acquisition of AirTouch and deals leading to the creation of the Verizon wireless business in the United States. Judging from Vodafone's acquisition story, Gent played his cards well, while both Vodafone's rivals and the financial markets acted irrationally in some instances. However, even Gent may have made some typical serial acquisition errors on the road to building the world's leading telecom company. This chapter uses the Vodafone story to illustrate how behavioral pitfalls in strategy, valuation, and bidding can be related to various components of the options and game valuation approach.Less
In a period of only a few years in the early 2000s, Vodafone's then CEO Chris Gent grew the company from a small UK-based mobile operator into the world leader, with over 240 million customers. He did this via a sequence of 26 strategic transactions, including the acquisition of AirTouch and deals leading to the creation of the Verizon wireless business in the United States. Judging from Vodafone's acquisition story, Gent played his cards well, while both Vodafone's rivals and the financial markets acted irrationally in some instances. However, even Gent may have made some typical serial acquisition errors on the road to building the world's leading telecom company. This chapter uses the Vodafone story to illustrate how behavioral pitfalls in strategy, valuation, and bidding can be related to various components of the options and game valuation approach.
Han Smit and Thras Moraitis
- Published in print:
- 2015
- Published Online:
- October 2017
- ISBN:
- 9780691140001
- eISBN:
- 9781400852178
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691140001.003.0004
- Subject:
- Business and Management, Knowledge Management
This chapter develops a framework for assessing the value generated by both the option-like and competitive characteristics of an acquisition strategy. The conceptual approach is based on real ...
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This chapter develops a framework for assessing the value generated by both the option-like and competitive characteristics of an acquisition strategy. The conceptual approach is based on real options and principles from game theory. It illustrates the approach with an example of how real options and games thinking were used in strategic decision making at a major pharmaceutical company. The method treats an acquisition strategy as a package of corporate real options actively managed by the firm in a context of competitive responses or changing market conditions. This framework can help management answer several questions that are important for a successful acquisition strategy: How valuable are the growth opportunities created by the acquisition? How can we best sequence the acquisition options in the strategy? When is it appropriate to grow organically, and when are strategic acquisitions the preferred route? How is the industry likely to respond, and how will that affect the value of our acquisitions and future targets? The subsequent sections present a series of frameworks to address these questions.Less
This chapter develops a framework for assessing the value generated by both the option-like and competitive characteristics of an acquisition strategy. The conceptual approach is based on real options and principles from game theory. It illustrates the approach with an example of how real options and games thinking were used in strategic decision making at a major pharmaceutical company. The method treats an acquisition strategy as a package of corporate real options actively managed by the firm in a context of competitive responses or changing market conditions. This framework can help management answer several questions that are important for a successful acquisition strategy: How valuable are the growth opportunities created by the acquisition? How can we best sequence the acquisition options in the strategy? When is it appropriate to grow organically, and when are strategic acquisitions the preferred route? How is the industry likely to respond, and how will that affect the value of our acquisitions and future targets? The subsequent sections present a series of frameworks to address these questions.
Han Smit and Thras Moraitis
- Published in print:
- 2015
- Published Online:
- October 2017
- ISBN:
- 9780691140001
- eISBN:
- 9781400852178
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691140001.003.0005
- Subject:
- Business and Management, Knowledge Management
This chapter discusses the application of the top-down and bottom-up duality of the real option frameworks to valuing serial acquisitions. It develops the market-based present value of growth options ...
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This chapter discusses the application of the top-down and bottom-up duality of the real option frameworks to valuing serial acquisitions. It develops the market-based present value of growth options (PVGO) method into a framework that directly connects serial acquisition strategy to value creation on financial markets, and so helps to explain the full market value of companies in consolidating industries. In addition, in a bottom-up approach, it considers acquisitions as portfolios of interrelating acquisition options, each stage being an option on the next, which can develop the firm's asset base dynamically and opportunistically. This dual approach to value acquisition programs is called the market method for acquisitions.Less
This chapter discusses the application of the top-down and bottom-up duality of the real option frameworks to valuing serial acquisitions. It develops the market-based present value of growth options (PVGO) method into a framework that directly connects serial acquisition strategy to value creation on financial markets, and so helps to explain the full market value of companies in consolidating industries. In addition, in a bottom-up approach, it considers acquisitions as portfolios of interrelating acquisition options, each stage being an option on the next, which can develop the firm's asset base dynamically and opportunistically. This dual approach to value acquisition programs is called the market method for acquisitions.
Stephen T. McElhaney
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0002
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
Liabilities for pension and retiree health-care benefits provided by US state and local governments are causing concerns for taxpayers and for those holding government bonds. Many question whether ...
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Liabilities for pension and retiree health-care benefits provided by US state and local governments are causing concerns for taxpayers and for those holding government bonds. Many question whether the methodology used to calculate these liabilities is appropriate, since the private sector calculates retirement system liabilities using different methods and assumptions. This chapter reviews and critiques current actuarial and accounting standards under which governmental retiree liabilities are calculated and compares and contrasts these standards to those used by private sector employers.Less
Liabilities for pension and retiree health-care benefits provided by US state and local governments are causing concerns for taxpayers and for those holding government bonds. Many question whether the methodology used to calculate these liabilities is appropriate, since the private sector calculates retirement system liabilities using different methods and assumptions. This chapter reviews and critiques current actuarial and accounting standards under which governmental retiree liabilities are calculated and compares and contrasts these standards to those used by private sector employers.
Jeremy Gold and Gordon Latter
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0003
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
State and local US pension plans hold an estimated $3 trillion in assets, with market values regularly disclosed in plan financial statements. By contrast, public defined benefit pension liabilities ...
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State and local US pension plans hold an estimated $3 trillion in assets, with market values regularly disclosed in plan financial statements. By contrast, public defined benefit pension liabilities are routinely reported at actuarial values that may differ substantially from market values. The authors propose that a more accurate way to value plan liabilities measures the present value of accrued benefits discounted at market interest rates for fixed income investments that are (or are nearly) default-free. They illustrate the difference between these measures for a set of public sector pensions using publicly available information.Less
State and local US pension plans hold an estimated $3 trillion in assets, with market values regularly disclosed in plan financial statements. By contrast, public defined benefit pension liabilities are routinely reported at actuarial values that may differ substantially from market values. The authors propose that a more accurate way to value plan liabilities measures the present value of accrued benefits discounted at market interest rates for fixed income investments that are (or are nearly) default-free. They illustrate the difference between these measures for a set of public sector pensions using publicly available information.
Parry Young
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0005
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
Pension fund contribution rate volatility has challenged state and local government defined benefit plan sponsors over time. Methods to contain volatility have been used for years but recent ...
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Pension fund contribution rate volatility has challenged state and local government defined benefit plan sponsors over time. Methods to contain volatility have been used for years but recent experience has placed greater urgency on the search for better solutions. This chapter examines the historical approach to bring stability to employer rates as well as some of the current thinking on the issues. Because both asset and liability changes can affect volatility, governments are looking at both sides of the balance sheet for relief.Less
Pension fund contribution rate volatility has challenged state and local government defined benefit plan sponsors over time. Methods to contain volatility have been used for years but recent experience has placed greater urgency on the search for better solutions. This chapter examines the historical approach to bring stability to employer rates as well as some of the current thinking on the issues. Because both asset and liability changes can affect volatility, governments are looking at both sides of the balance sheet for relief.
Raimond Maurer, Olivia S. Mitchell, and Ralph Rogalla
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0009
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
This chapter analyzes the risks and rewards of moving from an unfunded defined benefit pension system to a funded plan for civil servants in Germany, allowing for alternative portfolio mixes using a ...
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This chapter analyzes the risks and rewards of moving from an unfunded defined benefit pension system to a funded plan for civil servants in Germany, allowing for alternative portfolio mixes using a Monte Carlo framework and a Conditional Value at Risk metric. The authors identify an investment strategy for plan assets that will minimize worst-case pension costs; this turns out to be 22 percent in equities, 47 percent in bonds, and 31 percent in real estate. The authors show that moving toward a funded pension system for German civil servants can be beneficial to both taxpayers and civil servants.Less
This chapter analyzes the risks and rewards of moving from an unfunded defined benefit pension system to a funded plan for civil servants in Germany, allowing for alternative portfolio mixes using a Monte Carlo framework and a Conditional Value at Risk metric. The authors identify an investment strategy for plan assets that will minimize worst-case pension costs; this turns out to be 22 percent in equities, 47 percent in bonds, and 31 percent in real estate. The authors show that moving toward a funded pension system for German civil servants can be beneficial to both taxpayers and civil servants.
Richard Kraut
- Published in print:
- 2012
- Published Online:
- January 2012
- ISBN:
- 9780199844463
- eISBN:
- 9780199919550
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199844463.003.0003
- Subject:
- Philosophy, Moral Philosophy
This chapter presents the main arguments of the current study. The discussion proceeds on the basis of entirely secular assumptions. If God exists, and if God is absolute goodness, then there is such ...
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This chapter presents the main arguments of the current study. The discussion proceeds on the basis of entirely secular assumptions. If God exists, and if God is absolute goodness, then there is such a thing as absolute goodness, and something's being absolutely good, by being godlike, is a reason to value it. The study sets aside all questions about the existence and nature of God, and asks whether there is any other reason, drawn from assumptions widely accepted by common sense or secular philosophies, to suppose that there is such a thing as absolute goodness. Many friends of absolute goodness have assumed that there is, and have done so without seeking support in theological premises. Against them, it is argued that there are weighty reasons to demur.Less
This chapter presents the main arguments of the current study. The discussion proceeds on the basis of entirely secular assumptions. If God exists, and if God is absolute goodness, then there is such a thing as absolute goodness, and something's being absolutely good, by being godlike, is a reason to value it. The study sets aside all questions about the existence and nature of God, and asks whether there is any other reason, drawn from assumptions widely accepted by common sense or secular philosophies, to suppose that there is such a thing as absolute goodness. Many friends of absolute goodness have assumed that there is, and have done so without seeking support in theological premises. Against them, it is argued that there are weighty reasons to demur.
