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Asset Valuation with Incomplete Markets .

James R. Boatsman¹; Elba F. Baskin²

¹ Associate Professor, Oklahoma State University. 1 · ² Manager, Arthur Andersen & Co., Chicago. 2

Abstract ABSTRACT: Estimating market values of assets in absence of an observable market price is a problem that arises often in accounting practice. Examples in the areas of taxation, capital budgeting, current cost accounting, and accounting for leases are discussed herein. A usable valuation scheme for such assets is derived from a modification of the popular two-parameter capital asset pricing model. Indirect empirical evidence is presented which suggests that the valuation scheme yields superior predictions to two competing schemes which have been advanced in the literature: indexing and earnings capitalization. In addition, limitations of the valuation scheme are discussed.

DOI

10.2308/tar-4481041

Volume

56 (1)

Pages

38-53

Language

en

Export

BibTeX

Sources

crossref openalex