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

Kód výsledku v 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>

Výsledek na webu

<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>

Jazyk výsledku

angličtina

Název v původním jazyce

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

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

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

Popis výsledku anglicky

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.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50204 - Business and management

Projekt

—

Návaznosti

N - Vyzkumna aktivita podporovana z neverejnych zdroju

Rok uplatnění

2018

Kód důvěrnosti údajů

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

Název periodika

International Advances in Economic Research

ISSN

1083-0898

e-ISSN

—

Svazek periodika

24

Číslo periodika v rámci svazku

3

Stát vydavatele periodika

US - Spojené státy americké

Počet stran výsledku

2

Strana od-do

287-288

Kód UT WoS článku

000443216800010

EID výsledku v databázi Scopus

2-s2.0-85052598977