Musings on Markets

MAY 20, 2022

In my last post , I discussed how inflation's return has changed the calculus for investors, looking at how inflation affects returns on different asset classes, and tracing out the consequences for equity values, in the aggregate.

Price to Book 102

Price to Book Dividends Beta Equity 102

Startup Valuation Blog

MARCH 13, 2023

With careful planning and proactive measures, businesses can navigate the uncertainties of the financial landscape and emerge stronger and more resilient in the face of adversity. Silicon Valley Bank was a commercial bank that primarily served the technology, life science, venture capital, and private equity industries.

Banking 100

Banking Firm Value Finance Equity 100

Musings on Markets

JANUARY 5, 2024

Return on Equity 1. Equity Risk Premiums 2. Costs of equity & capital 4. Costs of equity & capital 1. Fundamental Growth in Equity Earnings 2. Return on Equity 2. Standard Deviation in Equity/Firm Value 2. Book Value Multiples 3. Beta & Risk 1. Debt Details 1.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Reynolds Holding

OCTOBER 26, 2022

In recent years, the gap between the compensation of CEOs and their vice presidents (VPs) has been increasing, especially equity compensation (i.e., First, the pay differential may relate to the varying risks those executives face in managing their firm. VP pay differential in equity compensation. stock and stock options).

Equity 45

Equity Firm Value Marketability 45

Value Scope

JULY 21, 2020

How do you justify making substantial investments and fundamental changes to corporate structures and culture without empirical evidence that it will make a direct impact on shareholder value, total shareholder return, net present value, and individual rates of return? Do ESG programs impact firm value?

Intangible Assets 130

Intangible Assets Beta Alpha Unlevered Beta 130

Biz Equity

JANUARY 12, 2023

Debt-to-equity : Compares a company’s total debt to total equity. The formula for debt-to-equity ratio is total liabilities divided by total shareholder equity. The higher the ratio, the more risk creditors, lenders and investors face, which is why they tend to lean toward companies with lower debt-to-equity ratios.

Business Valuation 52

Business Valuation Equity EBIT Firm Value 52

RNC

AUGUST 22, 2023

Equity valuation holds significance. However, like any tool, equity valuation models present their fair share of challenges and limitations. In this blog post, we will delve into the balance, between precision and practicality, in equity valuation. Discuss strategies to overcome these hurdles.

Discounted Cash Flow 52

Discounted Cash Flow Equity Equity Financing Business Valuation 52

Equilest

JANUARY 8, 2023

Modigliani-Miller Theorem in the no-tax world states that the value of a firm is independent of its capital structure, meaning that the mix of debt and equity used by the firm has no effect on its overall value. . . . Suppose each firm produces an annual cash flow of 10 million USD. Why is that?

Weighted Average Cost of Capital 40

Weighted Average Cost of Capital Business Valuation Capital Structure Debt Financing 40

Reynolds Holding

AUGUST 2, 2022

Second, private equity sponsors have become the key strategic decisionmakers in the typical large, distressed business. As a (predominantly) equity investor, a sponsor will tend to be biased toward postponing events such as a sale of the distressed business or a bankruptcy. 751 (2002). 1713 (2012); Greg Nini, David C.

Corporate Finance 64

Corporate Finance Equity Finance Enterprise Value 64

Startup Valuation Blog

DECEMBER 15, 2021

As the burn rate is lower, the company is expected to survive for a more extended period, and therefore the firm's value is expected to be higher. However, the value of a startup company can be calculated using various valuation methods. A simple example can understand this phenomenon.

Start-ups 100

Start-ups Business Valuation Firm Value Marketability 100

Reynolds Holding

OCTOBER 9, 2022

First, a conflict between equity and debt claimants may arise when stockholders expropriate the wealth of debtholders through risky investments. On the one hand, it prevents managers from taking opportunistic actions against shareholders, resulting in higher firm value.

Net Present Value 81

Net Present Value Marketability Firm Value Equity 81

Reynolds Holding

APRIL 10, 2022

While investors play a critical role in engaging with company boards and are increasingly focused on social equity, the evidence is scant on how these reforms affect investors’ monitoring role. This gap also contrasts with regulators’ reliance on investors to help ensure firms’ faithful implementation of the reforms. mutual funds).

Firm Value 45

Firm Value Equity Technology Compliance 45

Reynolds Holding

JUNE 26, 2024

In recent years, corporate diversity, equity, and inclusion (DEI) initiatives have become a hot topic in boardrooms and beyond.

Start-ups 64

Start-ups Marketability Equity Compliance 64

Reynolds Holding

MAY 1, 2023

Institutions have announced that their policies and objectives include greater racial and ethnic diversity, and they have supported proposals for increasing diversity and inclusion throughout the workforce, such as requiring companies to conduct racial equity audits and disclose their results.

Equity 80

Equity Firm Value 80

Reynolds Holding

FEBRUARY 5, 2023

Returns are adjusted for firm size and book-to-market of equity. This is direct evidence that the announcement causes expectations of firm value to be biased upward. Returns are adjusted for firm size and book-to-market of equity. We find no evidence for this possibility.

Marketability 59

Marketability Alpha Equity Firm Value 59

Andrew Stolz

AUGUST 6, 2020

This process helps the management invest in the assets that can maximize the firm’s value. It brings to light a potentially bad investment option, which, if avoided, helps to maximize the firm value. There are other internal factors that firms have to take into considerations. Capital Budgeting in Practice.

Net Present Value 52

Net Present Value Discounted Cash Flow Firm Value Business Valuation 52

Reynolds Holding

MAY 4, 2023

Just as bonds, which are less volatile than equities, historically provide lower returns than stocks, so may companies with less-volatile stock prices provide lower returns than companies with the potential to be rocked by controversy. [38] 2021 “The Economic Gains from Equity,” Federal Reserve Bank of San Francisco Working Paper 2021-11. [33]

Systematic Risk 90

Systematic Risk Finance Marketability Equity 90

Brian DeChesare

SEPTEMBER 20, 2023

Q: Why not private equity, growth equity, hedge funds, or entrepreneurship? Growth equity is a bit closer, but you’re more interested in early-stage companies that need VC support rather than already successful companies that need more capital. Q: What’s the difference between pre-money and post-money valuations?

Start-ups 59

Start-ups Equity Marketability Terminal Value 59

Reynolds Holding

JULY 26, 2023

As in other industries, a bank’s shareholders and board of directors provide incentives for management to maximize firm value. While bank shareholders may prefer risky actions that are likely correlated with increases in shareholder value, they must also gauge the likelihood of regulatory intervention.

Banking 40

Banking Equity Net Present Value Systematic Risk 40

Musings on Markets

JANUARY 6, 2023

I do report on a few market-wide data items especially on risk premiums for both equity and debt. I also report on pricing statistics, again broken down by industry grouping, with equity (PE, Price to Book, Price to Sales) and enterprise value (EV/EBIT, EV/EBITDA, EV/Sales, EV/Invested Capital) multiples. Cost of Equity 1.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 52

Reynolds Holding

DECEMBER 11, 2022

Domestic passive funds and ETFs now manage more than half of all assets under management (AUM) of domestic equity mutual funds and ETFs, and the Big Three passive fund managers (BlackRock, State Street, and Vanguard) cast over a quarter of the votes in S&P 500 companies. Do Index Funds Monitor ? Fahlenbrach (2017). 4] Brav, A.,

Firm Value 94

Firm Value Finance Marketability Equity 94

Reynolds Holding

AUGUST 19, 2024

Through investments, pronouncements, and policies, businesses have directly acted on issues like climate change, racial justice, reproductive freedom, voting rights, gun violence, gender equity, and international conflicts.

Firm Value 58

Firm Value Equity 58

Reynolds Holding

AUGUST 9, 2023

When looking into the components of CEO pay, we find that salary and cash-incentive pay are unaffected by EDGAR implementation, but there is a sharp decline in equity-based incentive pay, consistent with more negative press coverage of CEO incentive-based awards (Core, Guay, and Larcker, 2008; Kuhnen and Niessen, 2012). Core, John E.,

Technology 40

Technology Firm Value Finance Equity 40

Equilest

SEPTEMBER 23, 2022

In principle, there are two ways to finance the required investments in a firm - equity and foreign capital. Financial liquidity ratios describe the firm's ability to repay short-term obligations. Financial strength analysis is a process in which the firm's ability to repay its long-term obligations is checked.

Business Valuation 40

Business Valuation Equity Finance Firm Value 40

Reynolds Holding

JUNE 20, 2022

Over the past three decades, there has been increasing concern about how corporate governance structures such as classified boards and dual class stock entrench managers, reduce director effectiveness, and reduce firm value. Likely as a result, mature firms have increasingly eliminated these structures.

Equity 49

Equity Firm Value Marketability Technology 49

Reynolds Holding

APRIL 18, 2022

We examine the trade-off between fostering innovation and protecting investors in the important context of young life-cycle firms, those whose current strategic priorities require significant capital investments financed through debt or equity issuances and whose operations are not yet profitable.

Intangible Assets 49

Intangible Assets Marketability Firm Value Finance 49

Equilest

OCTOBER 13, 2022

When you sell the company, you sell the company's shares, i.e., the company's equity. Should the buyer take on the payment of the firm's debts, or will the seller pay them? Does the decision of who will pay the debt affect the company's value? Most companies have debts. But what about the debt? The answer is positive.

Business Valuation 40

Business Valuation Banking Firm Value Finance 40

Reynolds Holding

JANUARY 7, 2025

For example, if pay gaps are perceived by investors to enhance firm value, then we should not turn to capital markets for solutions. Following standard definitions, we define a firm-specific pay gap as the difference between what a firm would pay an all-white male workforce and what it pays its actual workforce.

Marketability 56

Marketability Firm Value Finance Equity 56

Valutico

AUGUST 17, 2022

As some recent start-up valuations are falling amidst investor caution, this new development comes at an opportune time to positively impact how effectively financial firms value young businesses. For growth or mature SMEs, this discrepancy between the WACC of listed vs private companies is accounted for with a Cost of Equity Premium.

Start-ups 52

Start-ups EBIT Weighted Average Cost of Capital Discounted Cash Flow 52

Harvard Corporate Governance

MARCH 5, 2025

An earlier article by two of us, The Perils of Small-Minority Controllers , defined small-minority controllers as shareholders that have control, due to a dual-class structure or some other factors, despite having a minority or sometimes even a small minority of the equity capital.

Firm Value 120

Firm Value Equity Finance Marketability 120

Reynolds Holding

JANUARY 9, 2025

Equity has become a dominant component of CEO compensation in the past three decades due to its ability to align the interests of managers and shareholders. Each year, a firm can award its CEO either a certain number (share-based) or a given dollar value (value-based) of equity grants. We find that about 40.6

Equity 45

Equity Firm Value Finance 45

Musings on Markets

JANUARY 10, 2025

Thus, as you peruse my historical data on implied equity risk premiums or PE ratios for the S&P 500 over time, you may be tempted to compute averages and use them in your investment strategies, or use my industry averages for debt ratios and pricing multiples as the target for every company in the peer group, but you should hold back.

Risk Premium 115

Risk Premium Dividends Start-ups Corporate Finance 115

Value Scope

SEPTEMBER 24, 2020

How do you justify making substantial investments and fundamental changes to corporate structures and culture without empirical evidence that it will make a direct impact on shareholder value, total shareholder return, net present value, and individual rates of return? . Do ESG programs impact firm value?

Intangible Assets 130

Intangible Assets Alpha Beta Marketability 130

Reynolds Holding

FEBRUARY 26, 2025

In general, we have settled on shareholder primacy, the principle that managers should maximize profits for the benefit of the equity holders, as the preferred constraint on the exercise of managerial power. See, e.g. , See Jens Frankenreiter, Cathy Hwang, Yaron Nili, & Eric Talley, Cleaning Corporate Governance , 170 U. 353 (2020). [2]

Equity 45

Equity Firm Value Marketability Compliance 45

Musings on Markets

FEBRUARY 6, 2025

The results, broken down broadly by geography are in the table below: As you can see, the aggregate market cap globally was up 12.17%, but much of that was the result of a strong US equity market. The Year to come This week has been a rocky one for global equities, and the trigger for the chaos has come from the United States.

Risk Premium 67

Risk Premium Start-ups Enterprise Value Equity 67