IDEAS home Printed from https://ideas.repec.org/p/zbw/arqudp/25.html
   My bibliography  Save this paper

Die Fehlbewertung durch das Stuttgarter Verfahren: eine Sensitivitätsanalyse der Werttreiber von Steuer- und Marktwerten

Author

Listed:
  • Müller, Jens

Abstract

This paper focuses on firm valuation for tax purposes of non-listed company shares and its sensitivity towards different market conditions. Since the value of a private company cannot be observed on the stock market the value has to be estimated. Due to uncertainty, expected future profits may not serve as a tax base. Therefore, in Germany e.g., a tax value is derived on the basis of a combination of net assets and historic profits - the so called Stuttgart Method. A Discounted Cash Flow Model, as a generally accepted method of firm valuation, is used as a proxy for the market value. In this analysis a simulation quantifies the gap between both approaches for firms of six different industries. Thereby, we find out which industries are discriminated and which are subsidized by taxation. Furthermore, the sensitivity of the value gap with regard to the relevant value drivers (cost of capital, financial structure, corporate tax rates, growth, and timing effects) is investigated. In the basic setting the value is only 31,3% to 92,4% of the market value. Thus, tax values lead to a severe undervaluation of the company. Moreover, the span of the relations shows that the firms are treated unequally. Variations show that overvaluations are also likely to be observed. These results are helpful to design a true and fair tax base.

Suggested Citation

  • Müller, Jens, 2007. "Die Fehlbewertung durch das Stuttgarter Verfahren: eine Sensitivitätsanalyse der Werttreiber von Steuer- und Marktwerten," arqus Discussion Papers in Quantitative Tax Research 25, arqus - Arbeitskreis Quantitative Steuerlehre.
  • Handle: RePEc:zbw:arqudp:25
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/27056/1/527780847.PDF
    Download Restriction: no

    More about this item

    Keywords

    firm valuation; gift tax; inheritance tax; tax value; sensitivity analysis; value gap; discounted cash flow;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:arqudp:25. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://www.arqus.info/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.