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Valuation Methodologies and Emerging Markets

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  • Qi Howard

    (Michigan Technological University)

Abstract

Correctly applying the valuation methodologies is important. Sabal (2007), using a well-designed example, shows that various methods give identical results, and asserts that APV is more convenient for the emerging market. However, a few issues are questionable which we intend to clarify, including (1) the evidence regarding target debt ratio; (2) the relationship between the WACC/APV and the capital structure; (3) the inconsistencies in the CCF application; and (4) why using the framework by Fernández (2004) does not necessarily prove Sabal's assertion. Our study and Sabal's work are both integral parts in contributing to the better understanding of business valuation.

Suggested Citation

  • Qi Howard, 2010. "Valuation Methodologies and Emerging Markets," Journal of Business Valuation and Economic Loss Analysis, De Gruyter, vol. 5(1), pages 1-18, April.
    • Handle: RePEc:bpj:jbvela:v:5:y:2010:i:1:n:2
    DOI: 10.2202/1932-9156.1064
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    References listed on IDEAS

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    2. Laurence Booth, 2002. "Finding Value Where None Exists: Pitfalls In Using Adjusted Present Value," Journal of Applied Corporate Finance, Morgan Stanley, vol. 15(1), pages 95-104, March.
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    Cited by:

    1. Qi, Howard, 2011. "Value and capacity of tax shields: An analysis of the slicing approach," Journal of Banking & Finance, Elsevier, vol. 35(1), pages 166-173, January.
    2. H. Qi & Y. A. Xie, 2016. "Cost of capital: spot rate or forward rate?," Applied Economics, Taylor & Francis Journals, vol. 48(40), pages 3804-3811, August.
    3. Maquieira, Carlos P. & Preve, Lorenzo A. & Sarria-Allende, Virginia, 2012. "Theory and practice of corporate finance: Evidence and distinctive features in Latin America," Emerging Markets Review, Elsevier, vol. 13(2), pages 118-148.

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    Keywords

    WACC; APV; CCF; capital structure;
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