On the 'Value' of Firm Valuation by Financial Experts
33 Pages Posted: 17 Aug 2005
Date Written: January 2005
This paper examines the added value of expert valuations and their relationship to corporate governance. The analysis is based on a unique sample of 44 closely held public companies that were appraised by financial experts for transactions outside of the Exchange. Each valuation is examined on the basis of pre- and post-valuation data. Our key findings are: (1)expert valuations are 29% higher than market; (2) in the short-run investors respond cautiously to expert valuation; in the long-run, however, the over-valuation appears to be followed by destruction of their values; (3) both are influenced by the corporate governance structure.
Keywords: Corporate governance; Firm valuation; Financial experts; Insiders
JEL Classification: G32, G34
Suggested Citation: Suggested Citation