
Published online:
26 September 2013
Published in print:
10 April 2013
Online ISBN:
9780804783224
Print ISBN:
9780804758307
Contents
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Outline of This Chapter Outline of This Chapter
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Elements of This Chapter Elements of This Chapter
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Why Discuss “Business” and “Value”? Why Discuss “Business” and “Value”?
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Economic Value Economic Value
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Common Notions of “Value” Common Notions of “Value”
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The Definition of Economic Value The Definition of Economic Value
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Money and Business Equity as Valuable Commodities Money and Business Equity as Valuable Commodities
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Economic Value Requires Institutions Necessary for Private Enterprise Economic Value Requires Institutions Necessary for Private Enterprise
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Market Value in Economics Market Value in Economics
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TEN PRINCIPLES OF VALUATION TEN PRINCIPLES OF VALUATION
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Origin of Valuation Principles Origin of Valuation Principles
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Valuation in Economics Valuation in Economics
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Traditional Valuation Methods Traditional Valuation Methods
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Valuation in Mathematical Finance Valuation in Mathematical Finance
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The Value Functional Approach from Control Theory The Value Functional Approach from Control Theory
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Summary of the Ten Valuation Principles Summary of the Ten Valuation Principles
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Notes on the Classification Notes on the Classification
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NPV Rule Not a Valuation Theory NPV Rule Not a Valuation Theory
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Mathematical Finance Not Identical to Option Pricing Mathematical Finance Not Identical to Option Pricing
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New Approaches in Valuation Worth Considering New Approaches in Valuation Worth Considering
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Cite
Anderson, Patrick L., 'Theories of Value', The Economics of Business Valuation: Towards a Value Functional Approach (Redwood City, CA , 2013; online edn, Stanford Scholarship Online, 26 Sept. 2013), https://doi.org/10.11126/stanford/9780804758307.003.0002, accessed 28 Apr. 2025.
Abstract
This chapter reviews the common definition of “market value” in Economics, and the practical use of the term in tax, accounting, and other fields. It then introduces ten different valuation theories. Among these are three different valuation principles derived from the Economics literature, three traditional methods of valuation, three from Mathematical Finance, and one novel principle that emerges from both Economics and Control Theory. Each of these is based on principles distinct from each other, in the sense that each fundamentally derives “value” from a different source.
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