Abstract:
In this paper I present a financial framework, known as Economic Value Added or EVA®, used to value firms and apply it to topics highlighted in the Austrian literature. In particular I contrast the market process emphasis in the Austrian literature with the neoclassical firm profit maximization and the role of Kirzner’s entrepreneurial alertness. Then I show how these micro topics can be aggregated into macro issues such as the Cantillon Effect, an aggregate average period of production, and the impact of country risk into value creation.
Comments welcome!
Prepared for the Free Market Institute’s symposium on Austrian Perspectives on Business Valuation for the Journal of Business Valuation and Economic Loss Analysis
Acknowledgments
I thank valuable comments by the attendees to the symposium on Austrian Perspectives on Business Valuation. Errors and omissions are my own.
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