Firm Valuation Based on Assets Synergies

This paper studies the assets aggregation problem using Choquet Integral algorithm on companies in Tehran stock exchange market. This study evaluates the effectiveness of this approach as a non-additive function considering synergy between assets as an alternative approach for valuation of firms.

For this purpose, operating and non-operating assets were clustered into four categories of receivables, inventories, properties, and long-term investments for 404 year-company between 2013 and 2019. The difference between this value against the market value was used to measure the efficiency of each company.

The results indicated that while the market evaluation of each company’s efficiency had a direct and meaningful correlation with net operation cash flow. It did not have a meaningful correlation with growth sale.

The market evaluation was more affected by the current inflation in the economy rather than improved quality of products and services. The comparison of market to book ratio and Choquet capacities revealed that the proposed approach was a better way for evaluating and determining the optimal asset combination.

This approach used available data from balance sheets and this can be used for other purposes including valuation of firms and more confidence in their ability to create added value.