Measuring, Documenting, and Defending the Company-Specific Equity Risk Premium Selection
Thursday, October 21, 2021
10:00am-11:40am PT • 1:00pm-2:40pm ET
Register to attend this event:
Join Robert Reilly and Connor Thurman for a dive into the theoretical basis for including a company-specific equity risk premium (CSRP) in the analyst’s cost of equity capital measurement analysis. Learn about measurement procedures and documentation procedures that the analyst may need to perform in the CSRP selection analysis. Also attendees will receive guidance to aid the analyst in the defense of the CSRP selection in a litigation context. Get the best practices you need for measuring the CSRP (by use of benchmarks or “proxies”), documenting the CSRP selection (including performing a functional analysis), and defending the CSRP selection in a litigation context.
- Theory of the cost of equity capital;
- Cost of equity capital measurement models:
- Buildup model;
- Capital asset pricing model;
- Modified capital asset pricing model (MCAPM); and
- Duff & Phelps risk premium report model.
- Systematic risk and unsystematic risk:
- Size-related equity risk premium; and
- Estimation of a CSRP:
- Consideration of a CSRP;
- Estimating a CSRP:
- Qualitative factors;
- Documentation procedures of a qualitative factor analysis; and
- Example of qualitative factor analysis.
- Proxies for the CSRP:
- Quantum of risk in the MCAPM;
- Quartile analysis of the CRSP deciles size premia studies 10th decile;
- Analysis of relative bond ratings and bond yields; and
- Analysis of illiquidity studies (pre-IPO and restricted stock studies).
- The CSRP and a functional analysis:
- Description of a functional analysis:
- Components of the functional analysis; and
- The 12 steps of the functional analysis.
- Application of the functional analysis to measure the CSRP related to the valuation subject; and
- Results of the functional analysis.
- Description of a functional analysis:
- Best practices in defending the CSRP selection; and
- Final thoughts and conclusion.
- Describe the theoretical basis of the cost of equity capital and the support for including a CSRP in many valuation, forensic analysis, and financial advisory contexts;
- Perform both: (a) qualitative factor analysis and documentation procedures; and (b) proxy analysis procedures to estimate a CSRP; and
- Describe how to support and defend a CSRP selection, in particular, within a litigation context.
Multi-User CPE Policy
Admission to this program includes one CPE certificate for one individual. Any additional listeners requesting CPE must pay a processing fee assessed at the completion of the online CPE survey for this course.
CPE Processing Fees may be bypassed by entering a valid, unused CPE Authorization Code (for single event purchasers) or by logging into BVR's website (for subscribers to BVR's Training Series).
- Prerequisites: Knowledge of Business Valuation
- Program Level: Advanced
- Preparation Required: None
- Delivery Method: Group Internet-Based
- Recommended CPE: 2.0 Credit Hours (Accounting – Technical)
Business Valuation Resources is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of
continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on
the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National
Registry of CPE Sponsors through its website: www.nasbaregistry.org.
BVR's Training Packs are an indispensable addition to any valuation reference library. Use them as training tools as many times as you'd like, wherever you are: play them at your computer at work or home, in your car, or on your personal audio device.
Delivered as an electronic download approximately four weeks after the program has aired, each Training Pack includes:
- Recordings and transcripts of the presentation
- All presentation visual aids and handouts
- All ancillary reading materials suggested by our presenters
If you are ordering a Training Pack after the four week window, the download link will be sent to you immediately via email. Please check your spam folder and add email@example.com to your “safe list” to ensure you receive your Training Pack.
See BVR's complete list of available Training Packs from past webinars for more information.
BVR's Satisfaction Guarantee
Business Valuation Resources offers a 100% money-back guarantee on our training services. If you are not completely satisfied with your experience, or have any feedback, please contact Business Valuation Resources at 1-503-479-8200 or firstname.lastname@example.org.