On the 'Value' of Firm Valuation by Financial Experts

33 Pages Posted: 17 Aug 2005

See all articles by Dan Elnathan

Dan Elnathan

The College of Management (Israel)

Ilanit Gavious

Ben-Gurion University of the Negev

Shmuel Hauser

Ben-Gurion University of the Negev - School of Management; Government of the State of Israel - Israel Securities Authority

Date Written: January 2005

Abstract

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

Elnathan, Dan and Gavious, Ilanit and Hauser, Shmuel, On the 'Value' of Firm Valuation by Financial Experts (January 2005). Available at SSRN: https://ssrn.com/abstract=764687 or http://dx.doi.org/10.2139/ssrn.764687

Dan Elnathan

The College of Management (Israel) ( email )

7 Yitzhak Rabin Boulevard
P. O. Box 9141
Rishon LeZion, 75190
Israel

Ilanit Gavious (Contact Author)

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheva 84105, 84105
Israel

Shmuel Hauser

Ben-Gurion University of the Negev - School of Management ( email )

P.O. Box 653
Beer-Sheva 84105
Israel
+972 2 651 3939 (Phone)
+972 7 6472896 (Fax)

Government of the State of Israel - Israel Securities Authority

22 Kanfei Nesharim Street
Jerusalem 95464
Israel

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