The companies’ appraisal in terms of inactive capital market

Authors

  • Тајана Сердар Faculty of Economics, University of Banja Luka

DOI:

https://doi.org/10.7251/ACE1523121S

Keywords:

inactive capital market, characteristics of inactivity, concepts of value, fair value, appraisal methods, discount rate

Abstract

In the inactive capital market value of company is not easy to determine. It is evident that in the case of inactive markets, the process of input determination for assessing the value is more complicated, and the value of the company itself, for reasons of lack of transparency, unavailability of information and other inherent risks is less relevant than it would be in active capital markets. In companies’ appraisal in terms of inactive capital markets, the level of importance attached to transaction prices is inevitably analyzed, compared to other indicators of fair value. The level of transaction significance depends on the facts and circumstances, such as: transaction volume, transaction temporal proximity to the measurement date and transactions comparability with asset or liability whose fair value is measured. In the paper we have started from two hypotheses. The first one is that the capital market in the Republic of Srpska is inactive and underdeveloped. The second hypothesis is that the inactive capital market significantly restricts and determines the ability of using approaches and methods of appraisal, the cost of capital and the concepts of value. Accordingly, in the inactive capital markets precondition of relevant appraisal is previous analysis of transactions prices significance and aspects of market inactivity. The aim of research is to emphasize the importance of the examination of capital markets characteristics in the process of appraisal that thereby will be relevant and useful for purchasers in making the right business and investment decisions.

Downloads

Download data is not yet available.

References

Бањалучка берза. (н.д.) Доступно на: https://www.blberza.com

Bekaert G., Harvey C. R., Lundblad, C. (2005). Liquidity and Expected Returns: Lessons from Emerging Markets. National Bureau of Economic Research. Working Paper, No. 11413. Преузето 20.05.2015 са: http://www.nber.org/papers/w11413

Beneda, N. L. (2003). Estimating Cost of Capital Using Bottom-up Betas . CPA Journal, vol. 73 (5), 66-71.

Benić, V.; Franić, I. (2008). Komparativna analiza likvidnosti tržišta kapitala Hrvatske i zemalja regije. Financijska teorija i praksa, 32 (4), 481-502.

World Bank. (2013). Financial Structure Database. Доступно на: www.worldbank.org

Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset. New Jersey: John Wiley and Sons, 3rd edition.

IАSB. Emerging Economies Group. (2011). Guidelines on the application of the fair value measurement standard in emerging economies. Преузето 18.05.2015. са http://www.ifrs.org/Te-organisation/Advisory-bodies/EEG/Documents/EEG-meetingJuly-2011.pdf

IVSC – International Valuation Standards Council. (2007). Међународни стандарди вредновања. 8. изде. Бања Лука: Савез рачуновођа и ревизора Републике Српске и Финрар.

Yeyati, L. E., Schmukler, S. L.,Van Horen, N. (2007). Emerging Market Liquidity and Crises. Policy Research Working Paper, 4445. The World Bank. Преузето 14.05.2015. са http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/12/13/000158349_20071213152426/Rendered/PDF/wps4445.pdf

Kumalić, I. (2013). Razvijenost fnansijskog tržišta u Bosni i Hercegovini. Časopis za ekonomiju i tržišne komunikacije, 3 (1), 57-72.

Lesmond, D. A. (2005). Liquidity of Emerging Markets. Journal of Financial Economics. 77 (2), 411-452

Микеревић, Д. (2009). Принципи и пракса процјене вриједности предузећа. Бања Лука: Финрар, Финанцинг.

Одбор за међународне рачуноводствене стандарде. (2010). МРС 38 – Нематеријална имовина. Лондон: Аутор

Pereiro, L. (2002). Valuation of Companies in Emerging Markets: A Practical Approach. New York: John Wiley and Sons

Познанић, В., Цвијановић, Ј. М. (2011). Методе вредновања предузећа, Београд: Економски институт.

Pratt, S. (2008). Cost of Capital: Estimation and Applications. New Jersey: John Wiley and Sons Сарајевска берза. (н.д.). Доступно на: http://www.sase.ba/v1

FASB Staff Position. (2008). FAS no. 157-3. Determining the fair value of a financial asset when the market for that asset is not active. USA: Financial Accounting Foundation. Преузето 10.05.2015. са http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1218220135667&acceptedDisclaimer=true

FASB Staff Position. (2009). FAS no. 157-е. Determining Whether a Market Is Not Active and a Transaction Is Not Distressed. USA: Financial Accounting Foundation. Преузето 30.05.2015. са http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176154537247&acceptedDisclaimer=true

Fernández, P. (2006). Levered and unlevered beta. Working Paper, WP no 488, January 2003, Rev. May 2006. Преузето 19.05.2015. са http://www.iese.edu/research/pdfs/DI-0488-E.pdf

Šonje, V.(2005). Veza koja nedostaje. Zagreb: Arhivanalitika.

Downloads

Published

2015-07-31

How to Cite

Сердар, Т. (2015). The companies’ appraisal in terms of inactive capital market. Acta Economica, 13(23), 121–138. https://doi.org/10.7251/ACE1523121S

Issue

Section

Review article