Abstract

LIMA, Fabiano Guasti; FIGLIOLI, Bruno; GATSIOS, Rafael Confetti  and  ASSAF NETO, Alexandre. Valuation of Companies in Brazil: A Conflict Between Theory and Practice. suma neg. [online]. 2020, vol.11, n.24, pp.53-63. ISSN 2215-910X.  https://doi.org/10.14349/sumneg/2020.v11.n24.a6.

This paper performs a descriptive analysis of the practices and assumptions adopted in the valuation reports of Brazilian companies. The methodologies and assumptions of the forecast models were analysed using valuation reports available from the Brazilian Securities and Exchange Commission between 2004 - 2018. The results indicate a preference for the discounted cash flow methodology over projection periods of between five and sixteen years that are measured in national currency without adjustment for inflation. Growth rates, both nominal and real, were not homogeneous due to large fluctuations over the years and among the sectors analysed. Moreover, the macroeconomic variable projections were not accurate when compared to actual economic values. The variables used to determine multiples presented in valuation reports were also analysed; the results indicate that the higher the risk, the lower the projected multiple, and the higher the indebtedness and the inflation rate, the higher the multiple value.

Keywords : Asset Pricing; Financial Forecasting and Simulation; Portfolio Choice; Investment Decisions; Futures Pricing.

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