Journal of Business Valuation and Economic Loss Analysis 

About: Journal of Business Valuation and Economic Loss Analysis is an academic journal published by De Gruyter. The journal publishes majorly in the area(s): Valuation (finance) & Discounted cash flow. It has an ISSN identifier of 1932-9156. Over the lifetime, 107 publications have been published receiving 513 citations. The journal is also known as: JBVELA & Journal of business valuation and economic loss analysis (Internet).

Fundamentals of Functional Business Valuation

Abstract: After a brief overview of different company valuation theories, this paper presents the main functions (decision, arbitration, and argument or negotiation function) of company valuation according to the functional (i.e., purpose-oriented) theory. The main body of the paper focuses on the decision function and shows how the decision value can be derived as a subjective limit value that different economic agents assign to the company. Finally, the differences between the functional and the market value oriented theory of company valuation are discussed.

Life and Death of Businesses: A Review of Research on Firm Mortality

Abstract: Neither the literature of finance nor the literature of valuation practitioners has taken account of the relatively short life expectancy of firms. Fewer than fifty percent of new firms live longer than ten years; yet, it is common practice to estimate firm value with a very long term horizon model such as the constant growth model. The purpose of this paper is to increase awareness of the life expectancy of firms and show how to take account of the likelihood of firm death in valuation. Data on firm death rates and life expectancy that is available in the field of industrial organization is reviewed and summarized so that valuation practitioners can take it into account in their valuations.

Business Valuation Inspired by the Austrian School

Abstract: The significant failure rates observed in mergers and acquisitions (M&A) indicate structural deficiencies in business transactions. This paper identifies serious weaknesses in common valuation methods that play a key role in poor transaction practice. Common valuation methods are in particular discounted cash flow (DCF) methods. DCF methods are usually based on neo-classical theories that assume the existence of a perfect and complete capital market. As will be demonstrated, the underlying theoretical patchwork is contradictory and lacks utility. Therefore, utilizing DCF methods to value a business and deduce economic decisions from such a valuation is decision-making built on sand. Following a normative-deductive methodology, this paper seeks an alternative theoretical concept to build a business valuation theory on solid ground. Such an alternative is found in the Austrian School of thought. The resulting valuation concept, subjective business valuation theory, is based on the theory of marginal utility proposed by Gossen, which was rediscovered and refined by the scholars of the early Austrian School. Contrary to highly restrictive neo-classical valuation, subjective business valuation approaches reality and is therefore well-suited for practical implementation.

Patent Valuation with Forecasts of Forward Citations

Abstract: Patents without established market values (e.g., no negotiated royalty rates) are often valued by comparing the number of citations the patent has received to the numbers received by other patents whose market values are established. For recently-issued patents, which have not had time to accumulate citations, this procedure can be noisy or even inapplicable. The current paper generalizes this valuation method to incorporate patent characteristics that relate to the number of citations the patent is expected to obtain in the future. We estimate statistical models in which the explanatory variables are observable characteristics of the patent at a given time, and the dependent variable is the number of citations that the patent receives after that date. Using several examples, we demonstrate a procedure for patent valuation that incorporates the statistical results, such that the valuation reflects the number of citations the patent has already received as well as the number it is expected, based on its characteristics, to receive in the future.

The Impact of Hurricanes Katrina, Rita and Wilma on Business Establishments

Abstract: We show that GIS based estimates of the economic impact of the 2005 hurricanes provide a more accurate characterization of affected businesses than widely reported estimates constructed from county level data. Our methodology relies on mapping business establishments into damage zones defined by remote sensing information provided by FEMA. Our methodology is based on pre-storm data, so estimates can be made available very quickly to inform the public as well as policy makers. Our GIS-based estimates indicate significantly smaller impacts on business payroll than previous estimates using county level data. Tests using post-storm data support our GIS methodology.