Discussion paper

DP11303 The Choice of Valuation Techniques in Practice: Education versus Profession

We use a survey approach to learn about valuation professionals’ choices and implementations of valuation techniques in practice. The survey design allows us to control for a respondent’s professional subgroup (e.g., consulting), education, experience, and valuation purpose characteristics. We find support for the “sociological hypothesis” that profession matters more than education; different professions have different valuation cultures. Other factors are less important. There are also many commonalities across respondents. Most use both multiples and DCF, but implement DCF in a way that almost turns it into a multiples exercise. Confusion reigns with respect to interest tax shields and the WACC. Higher educational levels do not reduce the confusion. Our overall findings matter because valuation professionals function as intermediaries in the capital allocation process. The relative unimportance of education raises questions about the role and benefit of higher level finance education.


Nyborg, K and L Mukhlynina (2016), ‘DP11303 The Choice of Valuation Techniques in Practice: Education versus Profession‘, CEPR Discussion Paper No. 11303. CEPR Press, Paris & London. https://cepr.org/publications/dp11303