Dr. Lars Franken and Prof. Dr. Jörn Schulte have published an article in the issue 22/2010 of the journal “Die Wirtschaftsprüfung”. The article deals with the question whether classic testing methods are actually suitable for the assessment of beta factors. The authors propose that a liquidity analysis of the underlying stocks represents an alternative criterion to filter beta factors. This criterion provides information about the market efficiency with regard to the incorporation of information. Hence, an additional selection of beta factors based on the liquidity of stocks appears reasonable in order to derive appropriate beta factors. In detail, as to the operational feasibility, the proposed approach requires the determination of liquidity ratios as well as the identification of critical limits for the liquidity ratios. In this regard, a corresponding publication is currently being prepared.

The executive board of the IVC Independent Valuation & Consulting, Andreas Dörschell, Dr. Lars Franken and Prof. Dr. Jörn Schulte published the practice guide “Discount Rate in the Valuation of Businesses” (“Kapitalisierungszinssatz in der Unternehmensbewertung”) in the IDW Verlag (release date November 10, 2009).

Based on the general framework of the IDW S 1 for the derivation of the discount rate, Dörschell / Franken / Schulte provide practical guidance on how a company-specific discount rate can be determined using capital market data. The accurate derivation of the beta factor within the CAPM and the critical appraisal of the market risk premium are central parts of the guide.

In addition, they elaborate on current issues such as the impact of the financial market crisis on the discount rate. Further aspects which are of practical relevance (e.g., risk premiums / discounts for small and medium-sized companies) are discussed.