In order to counteract the only recently ended low interest period, the IDW's Expert Committee for Valuation and Business Administration has been citing Total Market Return, which has been criticized as lacking theory, as a method for forming its cost of capital recommendation for several years. In an article in the journal Credit and Capital Markets (available here), Johannes Baumgartner and Andreas Schüler analyze Total Market Return both conceptually and empirically with a sample of almost 230 valuation reports. We assent to the criticism and show, among other things, that Total Market Return and the CAPM are incompatible, and that the higher cost of capital using Total Market Return in the sample leads to much lower company values. We recommend discarding Total Market Return as a method and hope for increased transparency in the formation of the cost of capital recommendation.

How is inflation reflected in company valuation? A new paper has been published on this subject: The consistent mapping of inflation expectations is important for company values and company valuation (not only) in times of high inflation rates. In an article in the Schmalenbach Journal of Business Research, Andreas Schüler and Sebastian Wünsche analyze inflation rates assumed by valuation practitioners and compare them with the expected inflation at the valuation date. The sample consists of around 260 expert opinions prepared by auditors over the past two decades. We criticize the preference for a so-called company-specific inflation rate of around 1% on average, quantify a number of value effects, show the transition from nominal to real valuation parameters and hope that increased inflation expectations will be adequately taken into account in the future.

In addition to other recent publications on the valuation of cash flows in foreign currency (cross-border valuation), an article by Professor Schüler entitled "Cross-border DCF valuation in a nutshell" has been published in the application-oriented Business Valuation OIV Journal. You can find the article here.

The article "Cross-border DCF valuation: discounting cash flows in foreign currency", written by Professor Schüler, deals with the pricing of exchange rate risk and the mapping of this risk in the valuation of internationally active companies. It has been accepted for publication by the Journal of Business Economics. The article is available here.