G12 - Asset Pricing; Trading Volume; Bond Interest RatesReturn

The article focuses on estimating the equity risk premium when valuing companies located in the Czech Republic and other European countries with comparable risk profiles. It highlights key challenges associated with traditional data sources, particularly from the U.S. market, which may lead to distorted estimates. The article presents a calculation of the implied equity risk premium based on current data from European companies with similar risk characteristics. This calculation, performed using the bottom-up approach, eliminates the need for additional premiums for country risk and company size. Estimates of the implied equity risk premium for large and mid-sized companies are regularly updated and published on the European Valuation Institute website (www.evalin.org).

This article discusses the main parameters for deriving discount rates at the WACC level using the CAPM in the Czech Republic for company valuation using the income approach. The article first summarizes the observed practice in the Czech Republic, then describes selected parameters of the discount rate, including model examples of various assumptions for the given parameters. Last chapter of the article contains brief reflection on discount rates for valuation of start-ups.

The M&A market in Europe has undergone a significant transformation over the last decade, driven by various economic, social and political factors. Between 2010 and 2023, the European M&A market experienced a period of sustained growth, with a significant increase in cross-border transactions and a shift in sector-specific trends. This paper analyses the historical developments in the European M&A market over the period 2010 to 2023 and identifies factors that may affect the European M&A market in terms of deal value.

This paper discusses the differences in intangible asset valuation approaches and methods enshrined in the OECD Transfer Pricing Guidelines and International Valuation Standards. The paper identifies some overlap, but also significant differences both at the level of the concept (category) of value and at the level of the main valuation methods themselves. At the level of the methods themselves, the typology of the main methods and their internal principles are compared. Special attention is given to the substantially different concept and use of the concept/method of profit-split between the IVS and the OECD.

Valuation by market multiples can be considered one of the most popular and widely used valuation methods of a company. This paper deals with the proposal of a methodological approach to the valuation of a company by market multiples. The main source of information for this paper was a literature search of best practice applications and research studies. The main focus was on the different parts of the valuation procedure from the selection of a peer group to the control premium. Thus, the output of this article is a summary of the most important factors that a valuator should consider when valuing a company using market multiples.

Prediction of financial time series has been at the centre of scientific research for a long time. Recently, there have been a wide range of possibilities to apply machine learning methods. Currently, there are so many scientific papers in the field of application of machine learning in finance that it is very difficult to find the way around. The presented paper aims to provide a fundamental overview of the current state of knowledge in this area, specifically within the area of corporate finance and business valuation, and to assist in orientation in the methods of machine learning those who have not yet encountered machine learning.

A number of studies and textbooks in the field of corporate valuation and corporate finance consider or prove the liquidity of shares in corporations as an important factor in value, resp. stock prices. Despite the urgency of this problem, only scarce information is available in the Czech literature on company valuation about the principles of applying the discount for lack of marketability (DLOM) and its size. This article provides an overview of the literature describing the basic relationship between liquidity (more precisely, public marketability) and the share price. A critical look at the results of empirical studies and theoretical models of this so-called illiquidity discount shows a number of challenges for its further research and also that its application not only in Czech conditions, of which most DLOM studies do not come (and therefore not locally common), but even in the home United States, there may be strong doubts as to whether the presented discounts include only the effect of illiquidity. Last but not least, this paper documents the development of marketability discount theory and empirically observed discount values.

This article deals with peer group selection for the purpose of the market valuation approach. The academic professional public does not agree on the optimal approach in respect of the peer group selection. Therefore, in this article we start with a synthesis of the current literature on this matter, including a description and discussion of the three main approaches, namely: (i) aggregated groups based on industry classification, (ii) search for fundamental indicators and (iii) alternative methods using the big data. Following is the explanation of machine learning applied in the finance and an outline of future research in which we want to verify the potential of machine learning algorithms in selecting a comparable group of companies.

This paper discusses the issue of the equity risk premium puzzle, launched by the article by Marik a Marikova (2019a, 2019b). The introductory part of the article focuses on the essential conclusions from the above article. Furthermore, the paper pays attention to deepening the interpretation of the CAPM model. The following part of the paper discusses the limitation of the approach, which is based on the implied risk premium. The final part of the paper analyzes the alternative methods of determining the equity risk premium.