Publication detail

PREDICTING THE VALUE OF CZECH FAMILY BUSINESSES: WHAT FACTORS INFLUENCE VALUE CREATION?

KARAS, M. REŽŇÁKOVÁ, M. SRBOVÁ, P.

Original Title

PREDICTING THE VALUE OF CZECH FAMILY BUSINESSES: WHAT FACTORS INFLUENCE VALUE CREATION?

Type

article in a collection out of WoS and Scopus

Language

English

Original Abstract

Our research is concerned with the valuation of family businesses, for which reason we investigated whether standard valuation procedures can be used for family businesses or whether their modification is necessary. To determine the value of a business, it is necessary to identify the factors that affect its ability to create value; one of these is the cost of equity. Estimating the cost of equity for unquoted companies is still an issue that has yet to be satisfactorily resolved. The combination of these issues leads to a gap in the research that we are seeking to fill with our research. The cost of equity was estimated using the modified CAPM approach, with the accounting beta as an approximation of market beta. The accounting beta was estimated on data on 34,602 SMEs operating in the Czech Republic from 2012 to 2020. We measured the ability of family businesses to create value as the difference between the ROE and the cost of equity (i.e. the value spread). The analysis of value spread was conducted on a sample of 7,955 family and non-family SMEs. A linear mixed-effect model was employed for the analysis, adopting an autoregressive (AR(1)) specification of the repeated covariance type. This model makes it possible to control for temporal dynamics. We investigated the impact of sub-factors on value creation, including business age, size, leverage and family ownership. The results show that the value spread is significantly affected primarily by family ownership and the age of the business. This implies that the valuation model for family businesses needs to be modified.

Keywords

family business, value creation, cost of equity, accounting beta, linear mixed-effect model

Authors

KARAS, M.; REŽŇÁKOVÁ, M.; SRBOVÁ, P.

Released

10. 11. 2022

Publisher

ZČU v Plzni, Fakulta ekonomická

Location

Plzeň

ISBN

978-80-261-1126-9

Book

Faculty of Economics | University of West Bohemia |Univerzitní 22 |306 14 Plzeň | Czech Republic tvp@fek.zcu.cz | tvp.zcu.cz 8th Annual International Scientific Conference Business Trends 2022

Edition

First

Pages count

13

URL

https://drive.google.com/drive/folders/1YiIEeOEM17gb7_igFpaJ7200YxY8_WQe

BibTex

@inproceedings{BUT182833,
  author="Michal {Karas} and Mária {Režňáková} and Pavla {Srbová}",
  title="PREDICTING THE VALUE OF CZECH FAMILY BUSINESSES: WHAT FACTORS INFLUENCE VALUE CREATION?",
  booktitle="Faculty of Economics | University of West Bohemia |Univerzitní 22 |306 14 Plzeň | Czech Republic
tvp@fek.zcu.cz | tvp.zcu.cz
8th Annual International Scientific Conference Business Trends 2022",
  year="2022",
  series="First",
  pages="13",
  publisher="ZČU v Plzni, Fakulta ekonomická",
  address="Plzeň",
  isbn="978-80-261-1126-9",
  url="https://drive.google.com/drive/folders/1YiIEeOEM17gb7_igFpaJ7200YxY8_WQe"
}