n Meditari : Research Journal of the School of Accounting Sciences - Methods of choice in the valuation of ordinary shareholders' equity : evidence from theory and practice
|Article Title||Methods of choice in the valuation of ordinary shareholders' equity : evidence from theory and practice|
|© Publisher:||University of Pretoria|
|Journal||Meditari : Research Journal of the School of Accounting Sciences|
|Publication Date||Jan 2009|
|Pages||117 - 135|
|Keyword(s)||Discounted cash flow, Discounts, Dividend growth model, Earnings before interest, tax, depreciation and amortisation, Equity valuation, Free cash flow, Majority interest, Minority interest and Premiums|
The question that inevitably surfaces in practice, and certainly in lecture halls, is which equity valuation method is superior. Popular opinion holds that academia and investment practitioners may have different preferences in this regard. This article investigates which primary minority and majority equity valuation methods are advocated by academia, and how well these preferences are aligned with the equity valuation methods that investment practitioners apply in practice. The research results reveal that, contrary to popular belief, academia and practice are fairly well aligned in terms of preferred equity valuation methods, with notable differences in their respective approaches.
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