20 Torrez Jimmy et.

al (2006) in the research article "Corporate Valuation", they discussed

corporate valuation methods like discounted cash flow models, Capital Asset Pricing Model
(CAPM), Arbitrage Pricing Models (APM), sales accelerator, cash flow models of investment,
economic base performance measures such as Economic Rent and Excess Market Value. Finally
they argued that, more modem methods are required to notice the changes in company's
financial positions, they extended the conclusion by commenting that manager's financial
experience is essential for companies to compete in a world with a constant change. 21 Damodaran
(2006) in his book "Damodaran on Valuation-Security analysis for Investment and Corporate
Finance", he classified business valuation in to three parts, first two parts provide compacted
version of both discounted cash flow and relative valuation models which are most popularly
used models in business valuation. In third part, he focused on loose ends in valuation like
liquidity, control, synergy, transparency, and distress which affect on value of business.
According to his opinion, there are too many valuation models available for business
valuation purpose, choosing the right model is as critical to arrive at a sensible value as
knowing how to use the model. He gave a guidelines could be used to choose the right
business valuation model. 22 Damodaran (2009) in his book "Investment Valuation" he writes on
risk less rate and risk premiums that to be considered in valuation, he also provided guidelines
about how to understand basic financial statement of the firm. He explained about how to
estimate a growth rate of firm to calculate future value of a firm. He guided further to the
investors and businessman about how to value a firm with negative earnings, valuation of private
companies, young companies, valuating future and forward contracts. 23 Howard Qi (2010) in
research article "Valuation Methodologies and Emerging Markets ", he states that, weighted
average cost of capital (WACC), adjusted present value (APV), cash flow to equity (CFTE) and
capital cash flow (CCF) are widely used business valuation methods in industry, however there is
still on-going debate with regard to their equivalency and the convenience of their applications.

24 Farooq M. Sharmeen & Thyagarajan Venu (2014) in their research article Valuation of
Firm .-Methods & Practices-An Evaluatiori'\ the authors compare various business valuation
methods and they emphasized on advantages, limitations and suitability of each valuation
method. They also noted that, due to capital market efficiencies in short run, there is
significant difference in share prices and fundamental values of the firm because investors create
opportunities to earn. However in the long term, stock prices and intrinsic value of business
coincides with each other, hence the mangers should lay more emphasis on intrinsic values.
Managers should not be influenced by short term market deviations but they should take
decisions based on DCF and Economic Profit. Finally they concluded that, DCF is the most
reliable method to arrive at the fair value after taking into account future performance of the
organization, consideration of the firm's future investment needs and discounting to the present
value makes DCF as a superior method. 25 Robert C. Merton.(1974) in research paper "On the
pricing of corporate debt: The risk structure of interest rates" he said that, the value of
corporate debt depends on the required rate of return on riskless debt, the various necessities and
limitations contained in the deal. Florian Steiger, (2008) in his research article "The Validity of
Company Valuation Using Discounted Cash Flow Methods", examined the theoretical and
practical views of the popularly used discounted cash flows (DCF) valuation method. He gives
a brief introduction of various valuation methods and mentioned how these methods could be
used to assess a company's value. The author also explained the key input factors, potentials &
weaknesses of company valuation. He concluded that, the discounted cash flow method is a
dominant method to analyze critical business environment, however this method is subject to
enormous estimations, the slight changes in the underlying estimation can valuation result
drastically. 27 Damodaran Aswath (2005) , in his research paper ''''Valuation Approaches and
Metrics: A Survey of the theory and Evidence", focused on theory and evidence on valuation
approaches. In the first part, he surveyed the literatures on discounted cash flow valuation
models, from dividend discount model to value stocks to the use of excess return models in
more recent years. In second part, he focused on relative valuation models and use of
multiples and comparables in valuation to know whether relative valuation models gives more
or less clear-cut prediction of value than discounted cash flow models, finally he set the stage for
further research about estimation challenges in case of MNCs which are operating at multiple
countries.

28 Kemsley Deen, Nissim Doron(2002) in their research article "Valuation Of The Debt Tax
Shield", they used cross-sectional regressions to predict the value of the debt tax shield and
recognized that, debt is linked with the value of operations along non tax dimensions. They
also estimated future profitabiHty of firm by regressing firm value on debt and profitability. 29
Piatt Harlan, et al.,(2010) in research paper "Free Cash Flow, Enterprise Value, and Investor
Caution", they compared actual cash flows with enterprise values and found that the equity
market is an extremely high discount rate which reduces future earnings of firm value. In of
case high discount rate the huge amount of future cash flows is practically ignored. They
found that stock prices do not reflect future corporate earnings, this finding contrast with the
well known statement in finance textbooks that "the value of a firm equals the present
discounted value of future cash flows." In fact, they found that enterprise value is substantially
less than the present value of future cash flows. Fernandez Pablo (2011) in research paper
"WACC: Definitions misconceptions and Errors" he described various parameters which are
used to calculate WACC and noted misconceptions and errors made by analyst while
calculating value of business. He also expressed the effect of tax shield on WACC. 31 Stanton
Richard et. al.(2005) in research paper "The Assumptions and Math Behind WACC and APV
Calculations", they gave outline of mathematics and assumptions behind weighted average cost
of capital (WACC) and adjusted present value (APV) calculations. According to them, this
paper is proposed for those who wish to know the purpose behind valuing a firm with
WACC and APV approaches. The authors studied relationship between existence or non-
existence of taxes, a constant percentage of debt in capital structure & frequency of debt
rebalancing while calculation business valuation. They highlighted how changing assumption
changes formula for equity betas and discount rates in DCF valuation. 32 Mohsen Dastgir et. al.
(2010) in research article "Valuation method of Capital Cash Flow discounted at the Weighted
Average Cost of Capital (WACC) before tax with Free Cash Flow discounted at the weighted
average cost of capital after tax and the adjusted present value", they presented different
theories to calculate present value of tax shield. They took a sample of fifty four firms fi^om among
those companies listed on Tehran Stock Exchange and their financial information for three-year
from 2004 to 2006 was analyzed by paired Student's t-test. Research results showed that due
an suitable discount rate the value of firm by Capital Cash Flow method become twice than
cash flow discounted method and adjusted present value method. They commented that, other
valuation methods are available for business valuation that could also be subject of many future
researches. Babak Panahi, et. al. (2014)" in "The Correlation of EVA and MVA with Stock
Price of Companies in Tehran Stock Market" investigated the potential correlation of EVA and
MVA as the prominent value based measures of performance and stock price of companies in
Tehran Stock Market. The study asserts that there is a positive interdependence of EVA and
MVA with stock price. This implies that a value based measures of performance could be
used to understand the stock price behavior. Therefore, if future EVA be positive, companies'
stocks will be best sold in the market. If future EVA be negative, company's stocks in the
market will be sold under their book value and these kinds of companies do not have any
chance to retain in competitive stock markets. The relationship between EVA and MVA
affirms that EVA has a direct linkage to a company's market value, and any changes in
investors' expectations about future EVA form the fluctuation of its market value. 34 Minjina
Dragos Ioan,(2009) ,in this paper "Relative Performance of Valuation Using Multiples. Empirical
Evidence on Bucharest Stock Exchange" he examined valuation performances of seven multiples
on a sample of BSE-listed firms. The author found that, when industry membership is used
as the selection method for comparable firms, the P/CF multiple shows the best valuation
performance. He concluded that P/E, P/B multiples shows the highest accuracies when ROE
is used as the selection method for comparable firms. The author says that, the accuracy of
multiple valuations are lower than those obtained using the same methods on more developed
capital markets. 35 Jaime Sabal (2009) in "The applicability of WACC for investment decisions"
he mentioned that, though WACC is suitable for project and firm valuation, it is not a
standard for investment decision making because WACC can often twist unappealing projects
into acceptable ones. Further he says that, WACC should use to judge the impact of a new
project on business value, if it is accepted, and when a fixed debt ratio pohcy is made. Richter
Frank, Herrmann Volker (2003) in research paper 'Pricing with performance controlled
multiples", they said that the multiples resulting from comparable companies are used as a
point of reference in business valuation.

In their research while calculating valuation, they used specific control factors such growth
and profitability to select "comparable assets". They also guided about varied methods of
estimating multiples from comparable assets. 37 Dukes William P. (2006) in research paper
"Business Valuation Basics for Attorneys'' he raised issues related to accounting practices,
premiums, discounts of various sorts, required return, capitalization rates. Author identified
these important issues to provide a standard business valuation method. He also argued that
practitioners and academician may use the same valuation model but they change on the
nature of the variables and the way they are to be proxied. This paper gives argument of the
differences between theory and practices of valuation. 38 Peloza John, Yachnin Ron (2008) in
research paper "Valuing Business Sustainability: A Systematic Review", they found positive
relationship between sustainability and financial performance of company. They guided to
managers about how to measure the financial impacts of their sustainability strategies. The
authors concluded that, financial performance relationship is affected due to the factors like
firm size, industry, economic conditions, and regulatory environment. 39 Reina Yahya Arakji,
Karl Reiner Lang, (2008) in research article "Avatar Business Value Analysis: "A method for the
Evaluation of Business valuation Creation in virtual commerce", they presented a theoretical
framework to evaluate and strategically manage the business. They outlined strategies which
may be considered by the operators of practical worlds and the real corporations to endorse
continuous effective business in actual environments. 40 Dukes William P, Bowlin Oswald D.
(1993) in the research article "Valuation of Closely-Held Firms: Another Look", authors took
the survey and responses from members of the American Society of Appraisers to know the
techniques used in the valuation of closely-held firms. They found most of the approaches
recommended in finance literature are used by practitioners while calculating business
valuation. They found, to decide discount rate in valuation many practitioners used a risk-free
rate plus a risk premium because of irregular payment of dividend by most small businesses.
Finally they concluded that estimate of business value changes due to differences in valuation
approaches, judgment of the analyst and risk evaluation because the application of valuation
techniques remains an art rather than a science. 46
41 Festel Gunter, et.al (2013) in research article "Valuation of Early Stage High-tech Start-up
Companies", they concluded that, the valuation of a young company is more difficult due to the
lack of historical data and uncertainty about many elements that could influence its
development. The authors presented a methodology for the valuation of early stage start-ups
which is proven in practice. 42 Berkman Henk et.al (2000) in research article "The Accuracy of
Price-Earnings and Discounted Cash Flow Methods of IPO Equity Valuation",ihcy compared
valuation resulting from conventional discounted cash flow and price earnings valuation methods
to the market price. They took newly listed companies 45 on New Zealand Stock Exchange to
compare valuation and they concluded that, the discounted cash flow method and price
earnings comparable produce same result. 43 Al Zararee Abdul Nafea, et. al. (2014) in research
paper "The Impact of Free Cash Flow on Market Value of Firm", they investigated the
relationship between Free Cash Flow to Equity and the firm's market value of the
pharmaceutical sector of Jordan by using a valuation technique. They concluded that, the gap
between theory and practice is still need to be adjusted by considering the relationship of
Free Cash Flow Equity, Net Income, Net Capital Expenditure, Working Capital and Debt
Position. According to them, the calculation of market value of company is crucial decision
because analyst has to consider various factors such as risk of debt and capital expenditure,
when the economic environment is unstable. Therefore Free Cash Flow to Equity can affect
the market value of the firm as much as profit rate can. Finally they commented that. Free
Cash Flow to Equity is used to calculate market values of a firm. 44 Brennan Michael J,
Schwartz Eduardo S.(2008) in research article '•'•Optimal Financial Policy and Firm Valuation",
they took a sample of listed Australian firms and calculated business valuation by using
relative valuation model, discounted cash flow models and residual income model. They said
that the residual income model gives better estimates of firm value than two other commonly
used models. Bailey, et.al (2008)45 in research paper "A Practical Comparison of Firm Valuation
Models: Cash Flow, Dividend And hicome", they compared three frequently used models such
as dividend discount model (DDM), residual income model (RIM) and discounted cash flow
model (DCF) and found that, the residual income model gives better estimates of firm value
compared with dividend discount model and discounted cash flow model. Finally they concluded
that, there are other valuation models which may be used for business valuation purpose and
it is not always understandable that which one is the most appropriate. In this paper focus is
given towards the measurement of the risk which is required to set the discount rate. 46 Kaviani et
al. (2013) in ''Valuation of Firm through CVFCFF and CVFCFE as New Models Based on Free
Cash Flow", they explained two new models of Free Cash Flow, which are called Created Value
from Free Cash Flow to Firm (CVFCFF) and Created Value from Free Cash Flow to Equity
(CVFCFE). These models provide required information to calculate the progress of firms. Further
they says that, free cash flow is a tool to measure the performance of firms which shows the
cash of firm after doing necessary expenditures for keeping and developing properties. Everett
Craig R., Fairchild Richard J.,(2015)'*^ in "v4 Theory of Entrepreneurial Overconfidence, Effort
and Firm Outcomes" the authors presented entrepreneurial behaviour theory that explains the
relationship between overconfidence and successful firm outcomes, such as acquisition or IPO.
The authors said that, rising daring produces two contradictory effects on the likelihood of a
winning result, it motivates to an entrepreneur to increase the riskiness of a undertaking and
provides higher entrepreneurial support, increasing likelihood of a successful exit. This paper
provides a theoretical explanation of how overconfidence and entrepreneurial effort are
correlated, and why the association between overconfidence and outcomes may not be smooth
and linear. Jose Antonio, Neto Paula (2011)"*^ in research paper "The Performance Of The P/B,
P/E and RIVM Valuation Models For U.S. Rate-Regulated Companies", they studied the
performance of the P/B, P/E and RIVM valuation models and found fundamental value of
equity of U.S. regulated companies. The results show that for rate-regulated companies, the
RIVM generates value estimates not accurate and less biased than the valuation obtained by
the simple applicafion of multiples-based approaches. They concluded that the residual income is
moderately low for rate-regulated companies in the United States. 49 Nwaeze, E. T. (1998) ,
"Adjustment process of the price to book ratio for regulating utilities", The author says that the
change in the price to book ratio (PB) of electric utilities makes partial change in cost-plus
pricing policy of regulation. He compared the results with benchmark results of manufacturing
companies to draw attention to the similarity or dissimilarity in the time-series behavior of PB for
regulated and non-regulated firms. The author concluded that change in Price to Book ratio follow
a partial adjustment process.

The adjustment period of electric utility companies is longer than manufacturing firms which
extends beyond the average regulatory lag. Furthermore, shifts in Price to Book are linked
with changes in future profits and investments. Bancel Franck, Mittoo Usha R. (2013J in
research paper "The Gap between Theory and Practice of Firm Valuation: Survey of European
Valuation Experts", the authors surveyed 356 valuation experts across 10 European countries
with CFA or equivalent designation to get proofs for their valuation practices, they found that
most experts use both Discounted Cash Flow (DCF) and Relative Valuation (RV) models but
the assumptions and estimation for both the methods vary widely. The experts suggested that
there is need of debate between academics and practitioners to make the valuation fi-amework
more "practical". Hinz et.al (2009) in ''^Company valuation in thin markets: How Does
CAPM Perform?", they gave deeper understanding of how share price information in thin markets
affects cost of capital estimation through CAPM. They also discussed the impact of thin trading
on CAPM's parameters with a different example and suggested remedies to cure potential
problem areas in business valuation. 52 Kolouchova Petra, Jiri Novak (2010) in research paper
"Cost of Equity Estimation Techniques used by Valuation Experts", they investigated the cost of
equity estimation in practice and suggested that, cost of equity is the most popular model of
is CAPM, in which risk premiums for unsystematic risks are always used, these premiums
depend on experience of expert's which is qualitative in nature. Further they say that, in spite
of selection of appropriate cost of equity model, finance practitioners are worried with how to
apply the models practically. Finally authors concluded that, the cost of equity estimation is
vague in terms of what parameters and techniques to be used; its estimation remains one of
the most challenging areas of business valuation. 53 Farooq M. Sharmeen & Thyagarajan Venu
(2014) in research paper "Valuation of Firm: Methods & Practices-An Evaluation", they
summarized advantages, suitability and limitations of various business valuation methods which
would useful to the researchers in the conduct of research on valuation. Further they mentioned
that, the complexity of measurement of value deals not only with company's historical financial
results but also with its ability to create value in the fiiture. 49

54 Pedro M. Reis Nogueira, Augusto Mario Gomes (2013) in research paper "The Terminal Value
(TV) performing infirm valuation: the gap of literature and research agenda", they studied available
Hterature on the Terminal Value to focus the weakness of the evaluation models of companies
which are used by the academic community, financial analysts, and to point out lines for
future research to minimize the errors and argued that the models of valuation of firms have
huge theoretical and practical limitations. They says that, business valuation models may not
represent the actual value of the firm, due to the divergence from other factors which are not
based on the internal and external premises of the enterprise growth. Adams, et. al (2010) in
research paper "A comparison of an alternative approaches to equity valuation of privately held
entrepreurial firms" the authors elaborated the list of valuation models to estimate the value of
non-publicly traded firms. The authors noted that, valuation of small entrepreurial businesses
is required to identify the features which are not generally considered in the valuation model of
large public firms. Sonneman Donald (2002) in research paper ''''Business Valuation
Controversies and Choices: Understand them and Their Impact on Value", the author says that a
extensive percentage of valuation disputes may create major issues in valuation, these major
issues have a deep influence on value of business. He suggested that, the business valuators
must use techniques that comply with the rigors of scientific studies, or he must employ
techniques consistently used by peers within the valuation profession. 57 Kazlauskiene Vilma,
Christauskas Ceslovas, (2007) in research paper '"''Risk Reflection in Business Valuation
Methodology", they investigated the relevant problems of risk reflection in business valuation.
The authors classified risk component of business in two parts like systematic and
unsystematic to the factors that have influence these risks. The authors classified factors of
systematic risk according to macro environment and industry environment factors and factors of
unsystematic risks are classified into quantitative and qualitative factors. 58 Bunea-Bonta§ et.al
(2004) in research paper '''•Issues on using the Discounted Cash Flows Methods for Asset
Valuation", the authors emphasized the variances between calculations of the frequently used
cash flows such as Free Cash Flow, Capital Cash Flow and Equity Cash Flow. According to
them. Discounted Cash Flow method is mostly used in investment finance and corporate
finance, its accuracy depends on identification of the suitable discount rate and prediction of future
cash flows. This paper highlights the differences between the valuations of various cash flow
streams that may be individualized within the enterprise, for the purpose of fmancial analysis.
59 Dr. Andrej Bertoncel (2006) in research paper "Acquisition Valuation: How to Value a
Going Concern", the author noted several steps involved in an acquisition valuation and
common reason for acquisitions of companies. He also explained valuation concepts, approaches and
methods of business valuation. Finally he concluded that, acquisition valuations are complex,
because they include a valuation of synergy and control which go beyond just valuing an asset.
Fernandez Pablo (2007) in research paper ^^Company Valuation Methods: The most common
errors in Valuation", author described four main, frequently used company valuation methods such
as balance sheet methods, income statement based methods, mixed methods and cash flow
discounting based methods. The author says that, cash flow discounting based methods most
conceptually correct methods. This paper gives the list of most common errors in valuation
which are found in more than one thousand valuations when he worked as a business consultant
and professor. CA Ved Parag (2013) in research paper “Valuation using Discounted Cash Flow
Method''' he says that. Discounted cash flow (DCF) method of valuation is gaining importance
in the recent years and it became popular when Reserve Bank of hidia has recognized DCF
as the only method under FEMA, for transactions between Residents and Non-Residents for
shares of Indian Company.

Further he says that DCF is also one of the recognized methods under section 56(2)(vii)(b)
of the Income-tax Act. He also noted that both DCF and traditional methods are equally
important as they give perspective about the historical performance of the Enterprise and its
future expectation. Further he extended that, although discounted cash flow method is well
accepted method in the recent times, it may not be suitable in certain cases, in reality the
businesses may go through the cycle of ups and down. Finally he concluded that, it is
important for the valuer to understand the risk involved in achievement of particular projections
and accordingly discount rate and growth rate for perpetuity needs to be chosen. Adams, et.
al(2011) in research paper ^'^Comparison of Alternative Approaches To Equity Valuation of
Privately Held Entrepreurial Firms", they gave two alternative approaches to estimate the
prospective value of private firms which are not traded in the public market place. The first
approach shows an accounting point of view and focus on capitalizing the residual earnings
of the firm. The second approach. Residual Income Model (RIM) states that the firm value is the
sum of its invested capital and the discounted present value of the residual income from its
future activities. Bauer Hans et.al (2005) in research paper "Customer-based corporate valuation:
Integrating the concepts of customer equity and shareholder value'', they mentioned weaknesses
and perceptions of accessible methods to estimate customer value and examined limitations of
the Shareholder Value (SHV) Concept. 64 Gardner John C. et. al (2012) in research paper "Valuing
Coca-Cola Using The Free Cash Flow to Equity Valuation Model", they provided a detailed
example about how to apply free cash flow to equity valuation model. They mixed free cash
flow to equity model with the super-normal growth model to know the current value of
Coca-Cola and found a value of Coca-Cola at $161 billion using the free cash flow to equity
model, and the actual market value of Coca-Cola was $150 billion. They mixed the concepts
of equity valuation, super-normal growth, required rate of return on equity and sustainable
growth to calculate the market value of Coca-Cola Corporation. Francis Jennifer, et.al.(2000)
in research paper "Comparing the Accuracy and Explain ability of Dividend, Free Cash Flow,
and Abnormal Earnings Equity Value Estimates", they provided experiential proof on the
dependability of inherent value resulting from three theoretically equal valuation models like
Discounted dividend model. Discounted free cash flow model, and the Discounted abnormal
earnings model. They used annual forecasts of the elements in these models to calculate
value of a sample of publicly traded firms during 1989-93. Finally they concluded that,
discounted abnormal earnings value estimates perform significantly better than discounted
dividend model or Free Cash Flow value estimates. Kimball Brett (2006) in research paper
"Economic Value Added: The accurate method of company valuation and just compensation for
management", he said that, Economic Value Added (EVA) measures economic value and it
requires manager to return the cost of capital to lenders and shareholders. The author
analyzed many cases of corruption involving Enron and Tyco with a focus on the reasons of
corruption. He concluded that, EVA implementation will be more accurate method of valuing a
company's worth and manager performance which will control dishonest practices and
encourage managers for making decisions in the best interest of shareholders. 52

Kramna Eva (2014) in research paper "Key Input Factors For Discounted Cash Flow
Valuations" hQ said that, discounted cash flow method requires many predictions, even small
change in inputs shows impact on final business value. He also examined consequences that
change the cost of capital and terminal growth, which changes the firm value. Further he says that,
weighted average cost of capital and terminal groMh rate are the important input factors which
are needed for discounted cash flow valuation and they show impact on valuation results
considerably. Hawkins George B., (1999) ' in research article "Business Risk: The Key to a
Supported Valuation", he says that, each business is a unique mix of management, people,
customers, suppliers, competition, industry, regulatory, and numerous other internal and external
factors. These elements come together in unique ways to make the company what it has been, what
it is today, and what it might become in the future. He concluded that, at the time of business
valuation, the valuator's job is to identify how these elements are present in a specific
company and to recognize what each element implies about the risks, opportunities, and future
of the business from the viewpoint of a buyer. 69 Lobo Prem M., Bottomley Matt (2015) in
research paper "A Research Study of Differences in the Approach to and Application of
Business Valuation Theory and Methodology from Different Regions around the World", they
collected, analyzed and compared valuation reports from Canada, United States, United Kingdom,
Germany, Netherlands & France. They identified and understood material differences which exist
in an application of business valuation theory and methodology around the world and reasons
for the same. Purpose behind this study was, to explore differences in international valuations, so
that Canadian Chartered Business Valuators can counsel to their international clients and their
adjudicators could better understand the reasons for differing approaches, positions and
methodologies taken by business valuators from around the world. Finally they concluded that
there are geo professional differences in the approach to and application of business valuation
theory and methodology from around the world, there do not appear to be significant differences
with respect to the structure of valuation reports and the choice of methodologies used. Further
they say that, US valuation standards tend to be more detailed, technical and prescriptive as
compared to Canadian Business Valuation Standards and International Valuation Standard, which
allow for greater application of professional judgment on the part of the valuator.

70 Chaney Paul K., Lewis Craig M. (1995) in research paper "Earnings management and firm
valuation under Asymmetric information" they developed a valuation model which estimates
income of the high-value firm and assume income-increasing accounting treatments relative to other
firms. They concluded that, firm value is based on the capacity to generate economic earnings; firms
have high value when investors expect high economic earnings