Current value as relational becoming: the case of goodwill impairment testing

Purpose The purpose of this study is to shed light on the tools, processes and negotiations involved in the formation of acceptable current values in the context of goodwill impairment testing. The study raises the questions of how a current value for goodwill becomes a faithful representation and how one expectation about the future becomes more convincing than other expectations. Design/methodology/approach Drawing on the study of associations, the analysis presents a case study of a large, internationally active organisation. By combining field notes, interview transcripts and a variety of documents, the qualitative analysis focusses on strategies and mechanisms of persuasion. Findings The findings reveal how epistemological objectivity of current values forms in three moments of relational becoming that codify, depersonalise and proceduralise the valuation task. Further, the study suggests that a convincing argument forms with the help of four enablers: a bricolage of inscriptions, methodological mystification, transformed professional identities and a practical need for closure. Originality/value The study contributes with an analysis and illustration of financial accounting as practice, elaborating on the meaning and construction of faithful representation in cases of measurement uncertainty.

Pricing to market: property valuation methods – a practical review

PurposeValuation is the process of determining Market Value. Property valuation, as with the valuation of all assets, is an estimation of price in the market. It is value in exchange. The valuer role is to determine the appropriate approach, the method and use the right model to achieve this aim as best as possible. It is a combination of analysing the market and determining the critical variables for the valuation method/model. The method is separate from the valuation process which should be followed (according to the International Valuation Standards Council Valuation Standards) regardless the valuation method chosen. There are valuation approaches, valuation methods and, as a subset of the methods, techniques or models.Design/methodology/approachThis practice briefing is an overview of the Valuation Methods and Models available to the valuer and comments on the appropriateness of valuation each in assessing Market Value for specific property types.FindingsThis briefing is a review of the valuation methods and models and models that can be applied to determine market value.Practical implicationsThe role of the valuer in practice is to identify the method of valuation and then apply the correct mathematical model for the valuation task in hand.Originality/valueThis provides guidance on how valuations can be presented to the client in accordance with the International Valuation Standards.

Stable and dynamic representations of value in the prefrontal cortex

Optimal decision-making requires that stimulus-value associations are kept up to date by constantly comparing the expected value of a stimulus with its experienced outcome. To do this, value information must be held in mind when a stimulus and outcome are separated in time. However, little is known about the neural mechanisms of working memory (WM) for value. Contradicting theories have suggested WM requires either persistent or transient neuronal activity, with stable or dynamic representations, respectively. To test these hypotheses, we recorded neuronal activity in the orbitofrontal and anterior cingulate cortex of two monkeys performing a valuation task. We found that features of all hypotheses were simultaneously present in prefrontal activity, and no single hypothesis was exclusively supported. Instead, mixed dynamics supported robust, time invariant value representations while also encoding the information in a temporally specific manner. We suggest that this hybrid coding is a critical mechanism supporting flexible cognitive abilities.

Representing future generations in the deliberative valuation of ecosystem services

Even though decisions taken today about managing ecosystem services are likely to have an effect on future generations’ well-being, decision making is based largely on current generations’ values, including altruistic concern for posterity. Deliberative forms of citizen engagement can provide a methodological framework for incorporating sustainability considerations in the valuation task and for understanding the reasoning behind peoples’ choices. This paper uses a deliberative form of citizen engagement to better understand the temporal dimensions of social values by incorporating into the valuation task two plausible future scenarios and assigning to the participants the role of trustees for future generations. In particular, we employed the deliberative multicriteria evaluation (DMCE) method with eleven groups in which a total of 67 participants assessed the relative importance of ten ecosystem services in the Upper Merrimack River watershed in New Hampshire. Our results suggest that a deliberative form of citizen engagement provides the appropriate space for incorporating intergenerational concerns into decision making. Participants set environmental targets by prioritizing the satisfaction of basic human needs, securing human and environmental health, and avoiding the loss of ecosystem services that cannot be substituted and may lead to irreversible future losses. This finding suggests that when preferences are socially constructed, then ethical values underpin valuations, making it possible to integrate ecosystem service tradeoffs into environmental decisions in a manner that respects the environmental rights of future generations.

A protocol analysis of use of forward and backward reasoning during valuation problem solving

Purpose Behavioural studies of valuers have suggested that valuers rely on a number of cognitive strategies involving reasoning and intuition when undertaking a valuation task. However, there are few studies of the actual reasoning mechanisms in valuation. In other fields, much attention has been paid to forward and backward reasoning, as this shows the choices and decisions that are made in undertaking a complex task. This paper studied this during a valuation task. The purpose of this paper is twofold: first, to develop a methodological approach for empirical research on valuers’ reasoning, and, second, to report expert-novice differences on valuers’ use of forward and backward reasoning during a valuation problem solving. Design/methodology/approach The study utilised a verbal protocol analysis (VPA) to elicit think-aloud data from a purposive sample of a group of valuers of different levels of expertise undertaking a commercial-valuation task. Through a content analysis interpretive strategy, the transcripts were analysed into different cognitive segments identifying the forward and backward reasoning strategies. Findings The findings showed that valuers accomplished the valuation task by dividing the overall problem into sub-problems. These sub-problems are thereafter solved by integrating available data with existing knowledge by relying more on forward reasoning than backward reasoning. However, there were effects associated with the level of expertise in the way the processes of forward and backward reasoning are used, with the expert and intermediate valuers being more thorough and comprehensive in their reasoning process than the novices. Research limitations/implications This study explores the possibility that forward and backward reasoning play an important role in commercial valuation problem solving using a limited sample of valuers. Given this, data cannot be generalised to all valuation practice settings but may motivate future research that examines the effectiveness of forward and backward reasoning in diverse valuation practice settings and develops a holistic model of valuation reasoning. Practical implications The findings of this study are applicable to valuation practice. Future training efforts need to evaluate the usefulness of teaching problem solving and explicitly recognise forward and backward reasoning, along with other problem-solving strategies uncovered in this study, as standard training strategies for influencing the quality of valuation decisions. Originality/value By adopting VPA, this study employs an insightful and rich dataset which allows an interpretation of thoughts of valuers into cognitive reasoning strategies that provide a deeper level of understanding of how valuers solve valuation problem; this has not been possible in previous related valuation studies.

Graphic Warning Labels Affect Hypothetical Cigarette Purchasing Behavior among Smokers Living with HIV

Cigarette pack graphic warning labels (GWLs) are associated with increased knowledge of tobacco-related harms; scant research has evaluated their effects on behavior among vulnerable populations. We used a behavioral economic approach to measure the effects of GWLs and price on hypothetical cigarette purchasing behavior among HIV-positive smokers. Participants (n = 222) completed a cigarette valuation task by making hypothetical choices between GWL cigarette packs at a fixed price ($7.00) and text-only warning label cigarette packs at increasing prices ($3.50 to $14.00; $0.25 increments). More than one-quarter (28.8%) of participants paid more to avoid GWLs. The remaining participants’ purchasing decisions appear to have been driven by price: 69.8% of participants chose the cheaper pack. Across all participants, overall monetary choice value observed for GWL cigarette packs (mean = $7.75) was greater than if choice was driven exclusively by price ($7.00). Most (87.4%) preferred the text-only warning label when GWL and text-only cigarette packs were equally priced. Correlation analysis indicated GWL pack preference was associated with agreement with statements that GWLs would stop individuals from having a cigarette or facilitate thoughts about quitting. These data suggest that GWLs may influence some HIV-positive smokers in such a way that they are willing to pay more to a void seeing GWLs.

The role of knowledge in valuation practice: expert valuers’ perceptions

Purpose The purpose of this paper is to explore the role knowledge plays in expert commercial valuer practice to unpack the way theoretical and experiential knowledge operates in order to improve practice and education. Design/methodology/approach Adopting a cognitivist perspective and identifying meta-reasoning, using a grounded theory methodology, through the study of 11 chartered valuation surveyors practicing in Birmingham, United Kingdom, the distinctive theoretical and experiential knowledge they used was elicited through their in-depth reflection on a valuation task followed by analytical interviews exploring meaning and reasons of actions described. Findings The results confirmed that multi-sourced and rich valuation knowledge was a key attribute of a valuation expert. However, the experiential knowledge was not used to undertake the task but to select the methods and knowledge appropriate for the task and context. This meta-reasoning is a key to the speed, accuracy and justification of their practices. Thus, the experience gained from many years of valuation provides expert valuers with meta-reasoning involving knowledge of what, how and when to deal with problems in different circumstances such as the knowledge of markets and handling of clients. Practical implications Making meta-reasoning a key aspect of valuation will identify its characteristics more clearly, thus assisting the development of practitioners and providing a new focus for education to advance professional goals. Originality/value Meta-reasoning and meta-cognitive knowledge have not been identified as a key to successful valuation practice. This meta-reasoning allows a subtle balance of theory and experience in valuation practice that is appropriate to the situation.

Property valuation in the UK: energy efficiency legislation and its impact on valuation

Purpose The purpose of this paper is to provide an insight into how the new energy efficiency legislation in the UK is impacting upon the valuation of certain properties. This paper looks at how to adapt implicit valuation models to reflect the new risks of the impact of legislation. Design/methodology/approach This practice briefing is an overview of the new legislation and comments on the appropriateness of valuation models in different scenarios. Findings This paper analyses the likelihood of capital and rental value changes under the new energy efficiency guidelines. Practical implications The role of the valuer in practice is to identify the impact of the new legislation on the value of the subject property and choose the correct model for the valuation task in hand. Originality/value This provides guidance on how valuations can be undertaken to reflect any impact of the new energy efficiency legislation.

Pricing to market

Purpose Since the global financial economic crisis hit the world markets in 2007/2008, the role of property valuation has been under greater and greater scrutiny. The process of valuation and its quality assurance has been addressed by the higher prominence of the International Valuation Standards Council (IVSC). This is a significant initiative worldwide. However, there has been little written on the appropriate use of valuation approaches and methods in market valuations. There is now a hierarchy of valuation definitions. In order, there are valuation approaches, valuation methods and, as a subset of the methods, techniques or models. The purpose of this paper is to look at the importance of identifying the appropriate approach to be adopted in market valuations and the methods, techniques and models that should be applied to determine market value. Design/methodology/approach This practice briefing is an overview of the valuation approaches, methods and models available to the valuer and comments on the appropriateness of valuation each in assessing market value. Findings This paper reviews the IVSC-recognised approaches and prompts the valuer to be careful with the semantics involved so that they are better placed to provide an unambiguous service to their clients. Practical implications The role of the valuer in practice is to identify the appropriate approach for the valuation of the subject property, choose the right method and then apply the correct mathematical model for the valuation task in hand. Originality/value This provides guidance on how valuations can be presented to the client in accordance with the International Valuation Standards.

Property valuation in the UK

Purpose The purpose of this paper is to comment upon the on-going debate about the preferred use of implicit models of valuation vs their explicit counterparts. The last few decades have seen changing complexities in UK leasing structures, and there is a suggestion that the implicit models are incapable of dealing with these complexities. This paper looks to address the issues and concerns with implicit models. Design/methodology/approach This education briefing is an overview of the pros and cons of both models and collates comments from industry to give an indication of the use of each model. Findings This paper analyses the appropriateness of implicit models of valuation and the areas in which they prove useful. Although the explicit models prove to be more useful in certain situations, the implicit models are also proved just as useful. The appropriate model needs to be used as appropriate to the property type. Practical implications Rather than seeing implicit and explicit models as “rivals”, they should be seen as two sides of the same coin. Both have advantages and disadvantages. The role of the valuer in practice is to choose the correct model for the valuation task in hand. Originality/value This is a review of existing models.