Are Market Values Fair? The Use of Market Prices in Impairment Testing

Business valuation and financial reporting issues are at the forefront of every Chief Financial Officer’s and Finance Director’s agenda.

As such, the approach to the annual impairment test performed on a public company’s balance sheet plays a central role. To address some of the issues and challenges associated with impairment testing in today’s financial climate, Duff & Phelps recently co-hosted a seminar (with Pirola Pennuto Zei & Associati) in Milan called “Are Market Values Fair? The use of market prices in impairment testing.”

The feature presentation of the seminar was an analysis of Italian public company data to understand “why and when do Italian companies impair their goodwill and other assets?” Our research included a comparison between book values and market values, and considerations of German and US listed companies’ behaviors.

Mr. Henk Oosterhout, Duff & Phelps (Head of International Operations)

Mr. Enrico Rovere, Pirola Pennuto Zei & Associati (Head of Advisory Group)

 

Other presentations included:

“General considerations on business valuation and on impairment testing in financial reporting”

Prof. Gualtiero Brugger, Bocconi University (Professor of Corporate Finance and OIV Member)

 

“Market considerations on Management Information System as a tool for appropriate valuations”

Mr. Nunzio Visciano, Borsa Italiana S.p.A. (Head of Equity Market Listing and OIV Member)

 

“IASB view on impairment testing and business valuations”

Mrs. Hilary Eastman, IASB (Leader, Investor Liaison Program)

 

Panel Discussion: “How to reflect the critical drivers in general business valuation and in impairment testing? What do market prices indicate regarding potential impairment risks?”

Panelists:

Prof. Gualtiero Brugger, Bocconi University (Professor of Corporate Finance and OIV Member)

Mr. Nunzio Visciano, Borsa Italiana S.p.A. (Head of Equity Market Listing and OIV Member)

Mrs. Hilary Eastman, IASB (Leader, Investor Liaison Program)

Mr. Mauro Baragiola, CITI (Head of Italian Equity Research)

Prof. Erik Peek, Rotterdam School of Management, Erasmus University (Duff & Phelps Chair in Business Analysis & Valuation)

Moderators:

Mr. Enrico Rovere and Mr. Henk Oosterhout

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