Rigging the Cost of Equity
Suggested benchmark analysis to assess the reasonableness of the cost of equity
In the February/March 2013 issue of the Financial Valuation & Litigation Expert (FVLE), Issue 41, Jim Hitchner authored âHow to âRigâ a Valuation: The Discount Rate.â This is the first of a two-part FVLE series. The article provides suggested guidance to unmask the intentional ârig.â
In the February/March 2013 issue of the Financial Valuation & Litigation Expert (FVLE), Issue 41, Jim Hitchner has authored âHow to âRigâ a Valuation: The Discount Rate.â This is the first of a two-part FVLE series. The article provides suggested guidance to unmask the intentional ârig.â Have you ever been involved in a valuation where you suspected another so-called expert âriggedâ his or her valuation?Â
Unfortunately, users of valuation services often canât tell the difference between an unbiased valuation and a biased, or rigged one. One side may do an unbiased, fair valuation, while the other side may be biased and come up with a much higher value. From a trier of factâs perspective, there is a low value and a high value, indicating possible bias from both experts.Â Whatâs a trier of fact to do? In this recent article, Part One of two, from the Financial Valuation and Litigation Expert, Jim Hitchner explores âriggedâ valuations by exposing the tricks of the trade in biased valuations with an emphasis on Â the discount rate. Read more at http://www.valuationproducts.com/featuredarticles.html
James R. Hitchner, CPA/ABV/CFF, ASA, is Managing Director of Financial Valuation Advisors (www.finvaluation.com) and is President of The Financial Consulting Group, (www.gofcg.org). He is CEO of Valuation Products and Services (www.valuationproducts.com), which created and distributes theÂ Business Valuation Standards Compliance ToolkitÂ and presents monthly webinars. He is also Editor in Chief ofÂ Financial Valuation and Litigation Expert, a bimonthly journal that presents views and tools from some of the leading experts in valuation, forensics/fraud and litigation services.Â Mr. Hitchner is editor/coauthor of the booksÂ Financial Valuation: Applications and ModelsÂ (FVAM), Second Edition;Â Financial Valuation WorkbookÂ (FVW), Second Edition, andÂ Valuation for Financial Reporting, Fair Value Measurements and Reporting: Intangible Assets, Goodwill, and ImpairmentÂ (VFR), Second Edition, all published by Wiley. He is also coauthor ofÂ PPCâs Guide to Business Valuations, 19th Edition, published by Thomson Reuters. FVAM and FVW have been adopted by the AICPA for its five-day National Business Valuation School courses and by NACVA for its three-day Advanced Business Valuation courses.