PURPOSE- This paper empirically evaluate the ability among various types of parsimonious equity valuation models in order to ascertain which model represents the value of equity the best and thereby manage to withstand factors causing valuation errors. The more complicated models applied, the more underlying assumptions are needed. The trade-off here, which will be investigated, is if the benefit of using more difficult models outweighs the cost of including the extra assumptions. Further on the empirical research´s results will be compared with the results provided by this previous studies examinating American companies. METHOD- Six valuation models using a discounting valuation method are evaluated; the Present Value of Expected Dividends (PVED), Residual Income Valuation (RIV), Residual Income Valuation Terminal Value Constrained [RIV(TVC)], Abnormal Earning Growth approach (AEG), Abnormal Earning Growth Terminal Value Constrained approach [AEG(TVC)]  and Free Cash Flow to the Firm model (FCFF). The five latter investment models are all based on the first model. FINDINGS- The aim of finding the smallest absolute valuation error in the empirical study is given to PVED, a model including little underlying assumptions and inputs. Hence, the implication of the application of valuation models can be summarized as that there are no clear benefits of applying complex models for Swedish companies, and the trade-off between using more complex models and thereby including more assumptions is not compelling given that the benefit does not exceed the cost. All the earnings methods are all found to be superior to the FCFF model, while the constrained RIV and AEG methods provide higher valuation errors than the unconstrained versions. The superiority of the PVED model is inconsistent with the previous results examining American firms, in which the RIV model is preferred. One of the reasons for the difference is the use of different accounting standards in the counties, and thereby the companies´ capital structure and the inputs used in the investment valuation may be somewhat unlike.

This study examines privatization and valuation processes in the context of privatized state owned enterprises in Tanzania. It investigates the implementation of the privatization process and valuation methodology in a developing economy where the market system and its associated institutions are not fully developed. The objective of this study is twofold, first to investigate how the privatization process was carried-out towards the stated objectives and second to find out how asset valuation was carried-out in assisting decision-making at the ‘Presidential Parastatal Sector Reform Commission’ (PSRC). As a means to achieve the above objective, the study traces five interrelated aspects in the privatization process. The tracing attempted to find out whether or not the five aspects proceeded in ways that enabled attainment of the stated objectives. The five interrelated aspects included, Formulation of privatization strategy; Valuation methods; Valuation error; Buyers of State owned enterprises and Developments after privatization. The study found that strategy formulation being undertaken by PSRC did not promote higher competition, higher prices and higher government revenue; the present Valuation methodology as used by the Valuation firms engaged by PSRC did not improve certainty in the determination of reserve price; further that valuation estimates were not good proxies of sale prices; the issue of wider ownership participation by the people was far from being achieved; And that follow-up on changes of ownership and changes in the physical developments was lacking. Both privatization and valuation stand to yield expected results where the market system and its institutions are well developed and are functioning properly. Had there been reasonable and basic preparations prior to take off, privatization process in Tanzania could have been carried out in better ways and yielded better results than it is now / QC 20100915