Basis of Value and the Discount Rate in the Squeeze-out Process in the Czech Republic

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F29142890%3A_____%2F18%3A00033324" target="_blank" >RIV/29142890:_____/18:00033324 - isvavai.cz</a>

Result on the web

<a href="https://link.springer.com/article/10.1007/s11294-018-9694-8?wt_mc=Internal.Event.1.SEM.ArticleAuthorAssignedToIssue&utm_source=ArticleAuthorAssignedToIssue&utm_medium=email&utm_content=AA_en_06082018&ArticleAuthorAssignedToIssue_20180901" target="_blank" >https://link.springer.com/article/10.1007/s11294-018-9694-8?wt_mc=Internal.Event.1.SEM.ArticleAuthorAssignedToIssue&utm_source=ArticleAuthorAssignedToIssue&utm_medium=email&utm_content=AA_en_06082018&ArticleAuthorAssignedToIssue_20180901</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1007/s11294-018-9694-8" target="_blank" >10.1007/s11294-018-9694-8</a>

Result language

angličtina

Original language name

Basis of Value and the Discount Rate in the Squeeze-out Process in the Czech Republic

Original language description

Since 2005, the shareholders of joint stock companies in the Czech Republic owning at least 90% of a company’s shares have been given (by Act 216/2005 of Coll. amending Law No. 513/1991 of Coll., the Commercial Code) the option of gaining ownership of the remaining shares from minority shareholders (i.e. squeezing-out minority shareholders) by providing them adequate compensation for their shares. Our research focuses on the issue of adequate compensation which has often created shareholder tension manifesting in post-closing litigation. The discount rate reflects the risk factors associated with the business and the required rate of return on employed capital. The common perception of the impact of the discount rate on the company value is that the higher the estimated discount rate, the lower the actual value of the company will be based on the appraiser’s calculations. However, this is a misconception since it ignores the double-edged influence of the discount rate on the income value of the shares. The higher discount rate leads to higher expected profitability of accepted investment projects and brings higher expected free cash flow to shareholders which means that the impact on share value is negligible. Since adequate compensation is the majority shareholder’s value in use, the assessment of the discount rate must reflect only the majority shareholder’s perspective on the company’s risk management.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50204 - Business and management

Project

—

Continuities

N - Vyzkumna aktivita podporovana z neverejnych zdroju

Publication year

2018

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

International Advances in Economic Research

ISSN

1083-0898

e-ISSN

—

Volume of the periodical

24

Issue of the periodical within the volume

3

Country of publishing house

US - UNITED STATES

Number of pages

2

Pages from-to

287-288

UT code for WoS article

000443216800010

EID of the result in the Scopus database

2-s2.0-85052598977