Study of valuation methods of firm, business and transaction
| Project/Area Number |
16530252
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Business administration
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| Research Institution | Okayama University |
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Principal Investigator |
KOYAMA Yasuhiro Okayama University, Economics, Professor, 経済学部, 教授 (10346405)
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| Project Period (FY) |
2004 – 2005
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| Project Status |
Completed (Fiscal Year 2005)
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| Budget Amount *help |
¥2,200,000 (Direct Cost: ¥2,200,000)
Fiscal Year 2005: ¥1,000,000 (Direct Cost: ¥1,000,000)
Fiscal Year 2004: ¥1,200,000 (Direct Cost: ¥1,200,000)
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| Keywords | corporate value / DCF / real option / market risk and private risk / overseas investment / corporate finance / risk management / risk-adjusted discount rate / 企業評価 / 海外投資評価 / 取引評価 / EVA / 契約評価 / リアルオプション |
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| Research Abstract |
9-1 Theoretical Study Results:
1) DCF approach and evaluation of private and market risk: The risk adjusted discount rate approach is often used in evaluating long-term investment projects. However, this approach does not necessarily give accurate picture in assessing profitability. Taking into account the nature of market and private(unique)risk, I have provided here a comprehensive review on the proper use of risk adjusted discount rate approach and its alternate method, certainty equivalent approach. In addition, I have demonstrated that overseas investment projects are less risky than domestic ones due to the diversification effect of market risk. Yet, in Japan corporate stakeholders, such as major shareholders, management and employees, have to put importance on private(unique) risk, because they often make life-time commitment to their companies. As a result to Japanese companies private(unique)risk are more important than market risk considering the vital role played by stakehold
… More
ers for the growth and success of their business.
2) Derivatives: I have proposed the use of the real option technique to evaluate the value of termination clause in long-term sales contracts and joint venture agreements. This is an attempt to quantify the economic value of legal terms such as walk out clause.
9-2 Survey Results on the Practice of Financial Policies and Valuation Technique Conducted by Japanese Public Companies
In December, 2005, I conducted a survey on corporate strategy, corporate finance policy, risk management as practiced in Japanese companies. Questionnaires were sent to 1,000 companies here in Japan. Subsequent answers are analyzed and reported in "Okayama Economic Review" Vol.38 No.2. The study has shown clear tendency among recent Japanese companies. Japanese companies' financial policies are moving from traditional to global standard. For example, stockholders are now considered to be more important than employees and 40% of Japanese public companies are using DCF techniques. The survey has also indicated that Japanese companies have begun to estimate the cost of capital reflecting risk premium as well as interest rate. Less
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Report
(3 results)
Research Products
(15 results)
