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Accuracy of Appraisers and Appraisal Methods of Closely Held Companies

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  • Charles P. Harper
  • Lawrence C. Rose

Abstract

Valuation experts often use different methodologies when estimating the value of a closely held company. This paper analyzes the general valuation methodologies and the specific factors used by appraisers. The data set consists of actual appraisals, financial data, and the sale prices for 258 companies. Results Indicate that valuation estimates are sensitive to both the methodology used and the background of the appraiser making the valuation.

Suggested Citation

  • Charles P. Harper & Lawrence C. Rose, 1993. "Accuracy of Appraisers and Appraisal Methods of Closely Held Companies," Entrepreneurship Theory and Practice, , vol. 17(3), pages 21-33, April.
    • Handle: RePEc:sae:entthe:v:17:y:1993:i:3:p:21-33
    DOI: 10.1177/104225879301700302
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    2. Lindenberg, Eric B & Ross, Stephen A, 1981. "Tobin's q Ratio and Industrial Organization," The Journal of Business, University of Chicago Press, vol. 54(1), pages 1-32, January.
    3. Basu, S, 1977. "Investment Performance of Common Stocks in Relation to Their Price-Earnings Ratios: A Test of the Efficient Market Hypothesis," Journal of Finance, American Finance Association, vol. 32(3), pages 663-682, June.
    4. Cynthia A. Montgomery & Birger Wernerfelt, 1988. "Diversification, Ricardian Rents, and Tobin's q," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 623-632, Winter.
    5. Darryl Waldron & Carl M. Hubbard, 1991. "Valuation Methods and Estimates in Relationship to Investing versus Consulting," Entrepreneurship Theory and Practice, , vol. 16(1), pages 43-52, October.
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    Cited by:

    1. Ge, Dingkun & Mahoney, James M. & Mahoney, Joseph T., 2005. "New Venture Valuation by Venture Capitalists: An Integrative Approach," Working Papers 05-0124, University of Illinois at Urbana-Champaign, College of Business.
    2. William P. Dukes, 2001. "Where Do We Stand on Closely-Held Firm Valuation?," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 6(1), pages 129-155, Spring.

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