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1 – 10 of over 50000Lucio Cassia, Stefano Paleari and Silvio Vismara
In this chapter we study the peer comparable approach used for the valuation of companies that went public on the Italian Nuovo Mercato. In Italy, IPO prospectuses often report…
Abstract
In this chapter we study the peer comparable approach used for the valuation of companies that went public on the Italian Nuovo Mercato. In Italy, IPO prospectuses often report the valuation methods used by investment banks. This allows us to analyze the accuracy of “real-world” valuation estimates. We show that underwriters rely on price-to-book and price-earnings multiples. The valuation estimates generated by these multiples are closest to offer prices. Conversely, when using enterprise value ratios comparable firms’ multiples are typically higher than those of the firms going public. We argue that underwriters have the possibility to select comparables that make their valuations look conservative.
Vincent Uwaifiokun Aihie, Abiodun Kolawole Oyetunji, Temitope Omotayo and Damilola Ekundayo
Income from investment properties can fluctuate depending on the state of the economy. The idea that there is always a potential exit (sale) value whenever the property stops…
Abstract
Purpose
Income from investment properties can fluctuate depending on the state of the economy. The idea that there is always a potential exit (sale) value whenever the property stops performing at its optimum or deflation in the economy will always appeal to investors. To determine housing prices, investors would rely on a direct comparison approach (DCA) of recent substitute sales in the open market. Appraisers use this approach to develop an opinion of value when there is a plethora of recent sales to analyse.
Design/methodology/approach
The study was designed to establish the use of the analytical hierarchy process (AHP) approach as a support tool for deciding property appraisals. A case study of an industrial single-storey stand-alone building with grade-level parking in the south-east of Calgary, Canada, was investigated with the AHP approach. The result was cross-referenced with the DCA.
Findings
Using a consistency index of 0.077321 and a consistency ratio of 0.085912, the matrix multiplication was determined to be 0.456706. The average valuations derived from the adjusted price per square foot using the direct comparison method and the unadjusted price per square foot using the AHP were deemed the best value estimate in the light of available comparables. The implications of the findings suggest that AHP, as a quantitative technique, can support and validate the use of similar non-recent sale comparables when appraising investment properties with the DCA.
Originality/value
AHP is an alternative aid in quantitatively deciding the most significant value attribute for comparison before subjective adjustments. When intuitively applied in the DCA, these subjective adjustments almost always lead to an overvaluation of properties.
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The intent of this paper is to identify the role that comparable evidence plays in property valuation and how the availability and use of comparable evidence varies between…
Abstract
Purpose
The intent of this paper is to identify the role that comparable evidence plays in property valuation and how the availability and use of comparable evidence varies between different countries and jurisdictions across Europe.
Design/methodology/approach
The paper is an overview of the role of comparable evidence, in all its forms, in property valuation. Through a survey of individuals and professional valuation associations, the relevant importance of different forms of market evidence was assessed and ranked according to the business transparency of the market in question.
Findings
The findings of this study helped inform The European Group of Valuers' Associations (TEGOVA) when setting the European Valuation Standards (EVS). The definition of Comparable Evidence should not be so narrow as to only include transactional evidence.
Practical implications
The role of the professional property valuer is to provide value estimates for a range of purposes but when that purpose is to assess Market Value, the importance of pricing to market cannot be over-stated.
Originality/value
This provides guidance on how to identify and use comparable evidence to undertake valuations for Market Value.
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Peter W. Stonebraker and Helen LaVan
Pay inequity based on gender arguably persists as the compensation issue with the most impact this half century. Oft‐cited evidence is that full‐time employed women are paid less…
Abstract
Pay inequity based on gender arguably persists as the compensation issue with the most impact this half century. Oft‐cited evidence is that full‐time employed women are paid less than two‐thirds the compensation of comparable male colleagues, a statistic which has not changed markedly for 50 years. Although pay differentials based on gender are not unique to the United States, a comparison with Canada and four European countries suggest that the US has a wider pay differential.
Michelle Hoover and Brian H. Kleiner
Comparable worth is a theory that has been hailed as the issue of the 90's. Lee Finney, feminist and labour activist from Contra Costa County, asserted in 1986, “It may not be the…
Abstract
Comparable worth is a theory that has been hailed as the issue of the 90's. Lee Finney, feminist and labour activist from Contra Costa County, asserted in 1986, “It may not be the issue of the eighties. But it's the issue of the nineties. Comparable worth is here to stay”[2, p.202]. Comparable worth has also been referred to as being overblown [3,p.121] and looney [2, p.52]. With so many diverse comments, an analysis of the current and future status of comparable worth is controversial.
Murray E. Cohen and Cynthia Fryer Cohen
A large earnings gap between men and women has persisted in the USA despite legislation intended to reduce it. One cause of this has been thought to be systematic marketplace…
Abstract
A large earnings gap between men and women has persisted in the USA despite legislation intended to reduce it. One cause of this has been thought to be systematic marketplace undervaluing of tasks performed by women. The Equal Employment Opportunity Commission sought to address this perceived inequity by reviving a 1940s concept, “comparable worth”. This article examines litigation that sought to enforce the legal requirement of “equal pay for comparable worth” and the implementation problems and controversies that ensue.
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Shih‐MingYou and Chin‐oh Chang
The purpose of this paper is to construct a weight model from the sales comparison approach.
Abstract
Purpose
The purpose of this paper is to construct a weight model from the sales comparison approach.
Design/methodology/approach
Although weighted average of comparables into sales comparison value is commonly applied in the past, most papers only focus mathematical calculation. This paper examines the correlation between weight and attributes of 6,345 sales comparable properties adopting the multiple regression model.
Findings
This paper finds the price type, proximity of transaction date, inside the neighborhood area or not, total gross adjustment as percent, numbers of adjustments and the attributes of other comparables considered in one appraisal are significant on the weight of comparables. The expected MAPE and Hit rate criterions are passed after forecasting 10 percent validation samples modeled by 90 percent samples randomly surveyed.
Practical implications
The weighted average to determine the sales comparison value is reasonable since the value conclusion will “correlate” to indication of value derived by different comparables.
Originality/value
This paper discusses the weight model and forecasts weights directly instead of only forecasting value. By elaborating on the core question of weights, this paper hopes to assist the degree of science and objectivity of appraisal.
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Paul Gallimore and Marvin Wolverton
Explains that bias in human problem‐solving behaviour may sometimes conflict with the assumptions that underlie normative models of valuation. Possibilities include faulty…
Abstract
Explains that bias in human problem‐solving behaviour may sometimes conflict with the assumptions that underlie normative models of valuation. Possibilities include faulty perceptions of the task, routinized valuation procedures that rely heavily on pending sale price‐knowledge and reliance on innate and distorting problem‐solving heuristics. Describes an experiment conducted with appraisers in the USA and valuers in the UK to investigate the impact of price knowledge on the process of valuation and the search and selection of comparable sales. Concludes that both appraisers and valuers can be subject to price‐knowledge bias, reflected in the choice of the less than “best” comparables and in the actual value estimate. Discusses how cultural differences in the appraisal and valuation processes, especially in the transparency of comparables adjustments, help to explain these effects.
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Louise May Hassan, Edward Shiu and Miriam McGowan
Prior research consistently found maximizers to experience greater regret over their choice than satisficers. Moreover, research also found maximizers to be trapped in a…
Abstract
Purpose
Prior research consistently found maximizers to experience greater regret over their choice than satisficers. Moreover, research also found maximizers to be trapped in a “maximization-regret-maximization” cycle. This paper aims to assess the role of construal level theory in alleviating regret felt by maximizers.
Design/methodology/approach
The authors examine the construal level theory (CLT) in conjunction with the choice context (comparable and non-comparable choices). Three experimental studies tested our assertion that a match between CLT mindset and choice set relieves regret for maximizers.
Findings
The authors show maximizers experience similar levels of regret compared to satisficers when considering comparable options in a concrete mindset, and non-comparable options in an abstract mindset. However, maximizers experience heightened regret in comparison to satisficers when considering non-comparable (comparable) options in a concrete (abstract) mindset. Choice difficulty mediates our effect.
Research limitations/implications
Future research is needed to replicate our results in real-life settings.
Practical implications
If marketers think that their product is likely to be compared with other comparable products, they should adopt product-specific information that focusses on how the product would be used. However, if marketers think that consumers will compare across non-comparable products, then they should focus on why their product is the most suitable to fulfil consumers’ needs.
Originality/value
This research represents the first attempt at reducing regret for maximizers and answers the call for an examination of the relationship between maximization and CLT. The research adds to the maximization literature by evidencing a CLT-based strategy that attenuates the negative experience of regret for maximizers.
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R.R. Fraser and F.M. Blackwell
Describes an empirical study of real estate value estimates inMelbourne, Australia, for the purpose of testing to see if computergenerated values are as good as those produced by…
Abstract
Describes an empirical study of real estate value estimates in Melbourne, Australia, for the purpose of testing to see if computer generated values are as good as those produced by ordinary manual processes. Describes computer systems, including MRA and a process known as comparables selection, a computer‐based system which is an attempt to emulate the manual comparable sale selection system. Finds that the manual method outperformed that carried out by computers.
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