Abstract

TELLEZ PORCEL, Hellen Claudia. History of company valuation methods. Investigación y Negocios [online]. 2020, vol.13, n.22, pp.111-117. ISSN 2521-2737.

Abstract This article refers to attempts in history to value a com-pany or to value capitals, from the development of the stock markets in the 19th century, until the last years of the 20th century. Period in which two historical events took place and became the catalysts for the development of company valuation techniques. A historical relationship is presented to know why investors used one or another technique at a certain time, beginning with the analysis of the dividend yield that due to the little information available for its use was not useful to face the South Sea Bubble, which as a consequence made investors more cautious so they began to use the book value to determine the holdings of companies' assets to backtheirshare packages. On the other hand, the intrin-sic value was discussed since the beginning of the emer-gence of the stock markets, however it was played with more force after the South Sea Bubble and the crash of 1929. Finally, the discounted cash flow method began to be used in 1960, but it was not until the Technology Bubble of the late twentieth century that it gained importance as a method to value companies and make investment comparisons.

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