Country-specific Cost of Capital is ‘By Far’ Damodaran’s Most Popular Download —BVWire News

Particularly When Valuing Companies with Substantial Foreign Operations, Business Valuation Analysts Know That Country-Specific Input Is Critical 

David Foster at BVWire News reports that in additional to his general data update for 2013, Prof. Aswath Damodaran (NYU Stern School of Business) provides a list of country default spreads and risk premiums.  Here’s the professor’s assessment:

“This is actually the most downloaded page by far,” the professor told a packed house during last week’s meeting of the CalCPA Business Valuation Section in Los Angeles. “The other pages don’t even come close.”

Damodaran’s data “get used in the strangest places,” he added, during his day-long session on the “dark side” of valuation. He even got an email from the New Zealand Milk Board and one from a businessman in Lebanon “who blamed me for his country’s problems.”

But as BV analysts know—particularly when valuing companies with substantial foreign operations—the country-specific input can be critical. “You must attach a risk premium incorporating that country risk, by either adjusting the cash flows or changing the discount rate,” Damodaran told CalCPA attendees. “It’s not just emerging companies you have to worry about.” To aid in the exercise, the professor has also posted his article, “Country Risk and Company Exposure: Theory and Practice,” on his website.

Read Mr. Foster’s whole piece at BVWire here.

see also:

• Country Default Spreads and Risk Premiums   —Aswath Damodaran’s Web Site  (January, 2013)
• The Web Push: Universities Begin to Offer Credits for Online Courses  —NYU Washington Square News (2/27/2013) (Damodaran has taught online for 20+ years)
• Apple Worth “A Lot More”  —CNBC (1/5/2013)
• DAMODARAN: Five Cautionary Notes For Every Value Investor  —Business Insider (1/29/2013)
• Best Resources for Calculating Resources for Calcuting Country-Specific COC, Brought to You By the Globally Minded ASA   —BVWire News (10/20/2011)
• Damodaran Online   —Aswath Damodaran’s Home Page

Aswath Damodaran Has Found Valuators Are Most Interested in Risks Involved in International Country Risk and Country Exposure