The first wave of highly leveraged transactions (HLTs) also known as leveraged buyouts (LBOs) began in the late 1980s. Fewer transactions occurred in the 1990's after a number of companies in the first wave failed when the economy slowed down. More recently, the driving force behind levered...

We examine the impact on an R&D valuation and its investment timing of abrupt events, options facing paradise (blockbusters) and purgatory (catastrophes). We show that the presence of a special case of Lévy jumps can model positive and negative effects in the investment opportunity even when...

This paper analyses the effects of labor intensity on a firm's operating risk and its expected stock returns. We isolate a pure labor intensity effect by using a relative measure with respect to the three-digit industry median level. We show that labor intensity is positively associated with...

El aumento del valor de la empresa en un periodo viene determinado fundamentalmente por los cambios de las expectativas de crecimiento de los flujos de la empresa y también por los cambios en la apreciación del riesgo de los mismos que se traducen en variaciones en la tasa de descuento. Por...

This paper contains the statistics of the Equity Premium or Market Risk Premium (MRP) used in 2011 for 56 countries. We got answers for 85 countries, but we only report the results for 56 countries with more than 6 answers. Most previous surveys have been interested in the Expected MRP, but this...

In my paper, I have managed to achieve full convergence of the results of valuation executed by four methods (CCF, APV, DCF and CFE), provided that cash flow is generated throughout the year (Mid-Year Convention). I have shown that convergence among all methods can be achieved whether we use the...

The recent interest in the valuation of the benefits from debt financing arises from the disagreement in the financial literature about the meaning of “value of tax shields.” Although it is accepted that the tax deductibility of interest increases the value of the firm, the correct valuation...

The interrelationships between cash flows, corresponding discount rates and values follow certain rules, knowing which one can quite easily and correctly find out value of given cash flow using the discounting-by-components framework, or to find the correct formulation of the discount rate for...

The average Equity Premium or Market Risk Premium (MRP) used in 2011 by professors for the USA (5.7%) is higher than the one used by analysts (5.0%) and companies (5.6%). The standard deviation of the MRP used in 2011 by analysts (1.1%) is lower than the ones of companies (2.0%) and professors...

We review 150 textbooks on corporate finance and valuation published between 1979 and 2009 by authors such as Brealey, Myers, Copeland, Damodaran, Merton, Ross, Bruner, Bodie, Penman, Arza and find that their recommendations regarding the equity premium range from 3% to 10%, and that 51 books...