Pub Date : 2024-07-02DOI: 10.1515/jbvela-2023-0015
D. Becker
Abstract In this paper, we develop two complete discounted-cash flow (DCF) frameworks for the valuation of constant-growth annuities and perpetuities. By ‘complete’ we mean that these frameworks allow the valuation of a firm or project by means of different DCF methods, particularly, the equity method, the free-cash-flow (FCF) method, the adjusted-present-value-method, and the capital-cash-flow method. This also requires the derivation of formulas that allow the translation between different required returns, like the required return on unlevered and levered equity, the discount rate in the FCF method, and the required return on the tax-shield. Our paper departs from the two most advocated and mutually exclusive frameworks when dealing with DCF. The first is based on Modigliani and Miller (M&M), where the FCF at different points in time are independently distributed. The second framework rests on the analysis of Miles and Ezzell (M&E) who presume a first-order autoregressive cash-flow process. Some elements of a ‘complete’ framework exist in the literature, but in our opinion, a complete picture has not been developed yet. The contributions of this paper are the following: (1) We develop (or expand) the set of formulas that are required for the valuation of constant-growth annuities and perpetuities; (2) The formulas we develop in this paper are based on a backward-iteration process, which in itself represents a suitable tool for firm valuation; (3) Using a numerical example, we show that the two mutually exclusive frameworks of M&M or M&E achieve very different valuation results; (4) It turns out that the expected returns and the growth rate of the FCF are partly linked, but this relationship is different in the two frameworks; (5) In our numerical examples, we show how the constant-growth annuity or perpetuity, can be integrated with an explicitly planned FCF.
{"title":"Consistent DCF Methods for Constant-Growth Annuities à la Modigliani & Miller or Miles & Ezzell","authors":"D. Becker","doi":"10.1515/jbvela-2023-0015","DOIUrl":"https://doi.org/10.1515/jbvela-2023-0015","url":null,"abstract":"Abstract In this paper, we develop two complete discounted-cash flow (DCF) frameworks for the valuation of constant-growth annuities and perpetuities. By ‘complete’ we mean that these frameworks allow the valuation of a firm or project by means of different DCF methods, particularly, the equity method, the free-cash-flow (FCF) method, the adjusted-present-value-method, and the capital-cash-flow method. This also requires the derivation of formulas that allow the translation between different required returns, like the required return on unlevered and levered equity, the discount rate in the FCF method, and the required return on the tax-shield. Our paper departs from the two most advocated and mutually exclusive frameworks when dealing with DCF. The first is based on Modigliani and Miller (M&M), where the FCF at different points in time are independently distributed. The second framework rests on the analysis of Miles and Ezzell (M&E) who presume a first-order autoregressive cash-flow process. Some elements of a ‘complete’ framework exist in the literature, but in our opinion, a complete picture has not been developed yet. The contributions of this paper are the following: (1) We develop (or expand) the set of formulas that are required for the valuation of constant-growth annuities and perpetuities; (2) The formulas we develop in this paper are based on a backward-iteration process, which in itself represents a suitable tool for firm valuation; (3) Using a numerical example, we show that the two mutually exclusive frameworks of M&M or M&E achieve very different valuation results; (4) It turns out that the expected returns and the growth rate of the FCF are partly linked, but this relationship is different in the two frameworks; (5) In our numerical examples, we show how the constant-growth annuity or perpetuity, can be integrated with an explicitly planned FCF.","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"362 4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-07-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141686346","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-22DOI: 10.1142/s2737566823500081
Muhammad Alaf bin Haji Redawan
{"title":"Central Bank Independence and Economic Growth: Evidence from ASEAN Countries","authors":"Muhammad Alaf bin Haji Redawan","doi":"10.1142/s2737566823500081","DOIUrl":"https://doi.org/10.1142/s2737566823500081","url":null,"abstract":"","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136099254","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-08DOI: 10.1142/s2737566823500056
L. Raimi, L. A. Agbetunde, Basirat Olaide Raimi
The purpose of this paper is to examine the hierarchical effects of Public Health Responses (PHRs) and fiscal policy measures (FPMs) on the tax morale (TM) of entrepreneurial firms in Nigeria during the COVID-19 pandemic. The theoretical basis for the study is based on social contract theory (SCT) and fiscal exchange theory (FET), which oblige entrepreneurs to pay taxes to the state in return for public goods and social services. Using a cross-sectional survey design, we collected primary data from 177 professional managers of entrepreneurial firms in Nigeria using online questionnaires. The sampled firms were accessed with the support of the Lagos Chamber of Commerce. Data collected at a point in time reflecting respondents’ views on the impact of PHRs and FPMs on TM were analyzed using hierarchical regression analysis. Three estimates emerged from the hierarchical regression analyses. The first estimation suggests that the PHRs have a significant positive effect on the TM of entrepreneurial firms. The second estimate suggests that the FPMs do not have a significant positive effect on the TM of entrepreneurial firms. The third estimation found that the interactive effects of PHRs and FPMs do not have a significant positive effect on the TM of entrepreneurial firms. The study, although modest, contributes to the literature on the entrepreneurial behavior of firms and tax morals in a period of economic uncertainty. The study provides valuable insights and validates the social contract and fiscal exchange theories in the recessionary period.
本文的目的是研究2019冠状病毒病大流行期间尼日利亚公共卫生应对措施(Public Health response, PHRs)和财政政策措施(fiscal policy measures, FPMs)对创业公司税收士气(tax morale, TM)的等级效应。该研究的理论基础是社会契约理论(SCT)和财政交换理论(FET)，这两种理论要求企业家向国家纳税，以换取公共产品和社会服务。采用横断面调查设计，我们通过在线问卷收集了尼日利亚177名创业公司职业经理人的原始数据。抽样公司是在拉各斯商会的支持下接触的。在反映受访者对phrr和FPMs对TM影响的观点的时间点收集的数据使用分层回归分析进行分析。从层次回归分析中得出三个估计。第一个估计表明，PHRs对创业型企业的TM有显著的正向影响。第二个估计表明，FPMs对创业公司的TM没有显著的正向影响。第三次评估发现，PHRs和FPMs的交互效应对创业企业的TM没有显著的正向影响。这项研究，虽然是适度的，但对经济不确定时期企业的创业行为和税收道德的文献有所贡献。本研究为经济衰退时期的社会契约理论和财政交换理论提供了有价值的见解和验证。
{"title":"HIERARCHICAL EFFECTS OF PUBLIC HEALTH RESPONSES AND FISCAL POLICY MEASURES ON TAX MORALE OF ENTREPRENEURIAL FIRMS DURING THE COVID-19 PANDEMIC IN NIGERIA","authors":"L. Raimi, L. A. Agbetunde, Basirat Olaide Raimi","doi":"10.1142/s2737566823500056","DOIUrl":"https://doi.org/10.1142/s2737566823500056","url":null,"abstract":"The purpose of this paper is to examine the hierarchical effects of Public Health Responses (PHRs) and fiscal policy measures (FPMs) on the tax morale (TM) of entrepreneurial firms in Nigeria during the COVID-19 pandemic. The theoretical basis for the study is based on social contract theory (SCT) and fiscal exchange theory (FET), which oblige entrepreneurs to pay taxes to the state in return for public goods and social services. Using a cross-sectional survey design, we collected primary data from 177 professional managers of entrepreneurial firms in Nigeria using online questionnaires. The sampled firms were accessed with the support of the Lagos Chamber of Commerce. Data collected at a point in time reflecting respondents’ views on the impact of PHRs and FPMs on TM were analyzed using hierarchical regression analysis. Three estimates emerged from the hierarchical regression analyses. The first estimation suggests that the PHRs have a significant positive effect on the TM of entrepreneurial firms. The second estimate suggests that the FPMs do not have a significant positive effect on the TM of entrepreneurial firms. The third estimation found that the interactive effects of PHRs and FPMs do not have a significant positive effect on the TM of entrepreneurial firms. The study, although modest, contributes to the literature on the entrepreneurial behavior of firms and tax morals in a period of economic uncertainty. The study provides valuable insights and validates the social contract and fiscal exchange theories in the recessionary period.","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"28 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81615132","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-23DOI: 10.1142/s2737566823500068
G. Kankam, Henry Okai Aryeetey, Daniel Ato Adubah
{"title":"Product Development and Customer Loyalty: The Mediating Role of Visual Branding","authors":"G. Kankam, Henry Okai Aryeetey, Daniel Ato Adubah","doi":"10.1142/s2737566823500068","DOIUrl":"https://doi.org/10.1142/s2737566823500068","url":null,"abstract":"","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"46 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-06-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85979806","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-23DOI: 10.1142/s273756682350007x
Areezna Arza Binti Haji Abdullah
{"title":"Urban Population and CO2 Emission on GDP Per Capita: ASEAN Countries","authors":"Areezna Arza Binti Haji Abdullah","doi":"10.1142/s273756682350007x","DOIUrl":"https://doi.org/10.1142/s273756682350007x","url":null,"abstract":"","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-06-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83613817","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-19DOI: 10.1142/s2737566823500044
L. Pang
{"title":"Implementation of the New Performance Appraisal System in the Brunei Public Sector: Initial Responses","authors":"L. Pang","doi":"10.1142/s2737566823500044","DOIUrl":"https://doi.org/10.1142/s2737566823500044","url":null,"abstract":"","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"74 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-05-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82471899","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-09DOI: 10.1515/jbvela-2023-0004
S. Feldman, Todd J. Feldman
Abstract We seek to determine whether a firm specific risk premium (FSRP) exists for private firms. We show that private equity investors price firm specific risk as part of establishing the expected rate of return hurdle rate. Our research is based on survey data constructed by the Private Capital Markets Project. We decompose the rate of return into its component parts-market risk premium, size premium, liquidity premium and firm specific risk premium (FSRP). We find that on average PE FSRP varies between zero and six percent. These findings indicate that the cost of capital buildup used in valuing private firms should include a premium for firm specific risk unless facts and circumstances suggest otherwise.
{"title":"Understanding the Firm Specific Risk Premium","authors":"S. Feldman, Todd J. Feldman","doi":"10.1515/jbvela-2023-0004","DOIUrl":"https://doi.org/10.1515/jbvela-2023-0004","url":null,"abstract":"Abstract We seek to determine whether a firm specific risk premium (FSRP) exists for private firms. We show that private equity investors price firm specific risk as part of establishing the expected rate of return hurdle rate. Our research is based on survey data constructed by the Private Capital Markets Project. We decompose the rate of return into its component parts-market risk premium, size premium, liquidity premium and firm specific risk premium (FSRP). We find that on average PE FSRP varies between zero and six percent. These findings indicate that the cost of capital buildup used in valuing private firms should include a premium for firm specific risk unless facts and circumstances suggest otherwise.","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"0 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-05-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47586483","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-15DOI: 10.1142/s2737566823500020
Jannatul Ferdaous
{"title":"The effect of economic growth determinants on economic growth: a study on different financial systems","authors":"Jannatul Ferdaous","doi":"10.1142/s2737566823500020","DOIUrl":"https://doi.org/10.1142/s2737566823500020","url":null,"abstract":"","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"111 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83557472","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-15DOI: 10.1142/s2737566823500032
Tolulope Elorhor Obele, O. Adebiyi
{"title":"Quantitative assessment of the effect of government expenditure on poverty incidence in nigeria","authors":"Tolulope Elorhor Obele, O. Adebiyi","doi":"10.1142/s2737566823500032","DOIUrl":"https://doi.org/10.1142/s2737566823500032","url":null,"abstract":"","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"89 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84213768","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-03-25DOI: 10.1142/s2737566822020017
L. Raimi, Hani El-Chaarani, M. Tariq
{"title":"MESSAGE FROM THE GUEST EDITORS SOCIAL ENTREPRENEURSHIP AND DIGITAL ENTREPRENEURSHIP AS DRIVERS OF SDGS AND POST-COVID-19 ECONOMIC RECOVERY","authors":"L. Raimi, Hani El-Chaarani, M. Tariq","doi":"10.1142/s2737566822020017","DOIUrl":"https://doi.org/10.1142/s2737566822020017","url":null,"abstract":"","PeriodicalId":39482,"journal":{"name":"Journal of Business Valuation and Economic Loss Analysis","volume":"3 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90771101","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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