Valuation of Unlisted Direct Investment Equity

Author/Editor:

Thomas Elkjaer ; Jannick Damgaard ; Emmanuel O. Kumah

Publication Date:

November 1, 2009

Electronic Access:

Free Full Text (PDF file size is 1118 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper analyzes the seven valuation methods for unlisted direct investment equity included in the recently adopted IMF Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6). Based on publicly available Danish data, we test the three methods that are generally applicable and find that the choice of valuation method and estimation technique can have a highly significant impact on the international investment position, pointing to the need for further harmonization. The results show that the price-to-book value method generates more robust market value estimates than the price-to-earnings method. This finding suggests that the valuation basis for the forthcoming Coordinated Direct Investment Survey - own funds at book value -will provide useful information for compiling the international investment position.

Series:

Working Paper No. 09/242

Subject:

English

Publication Date:

November 1, 2009

ISBN/ISSN:

9781451873894/1018-5941

Stock No:

WPIEA2009242

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

72

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