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Informationen zum Autor Aswath Damodaran Klappentext "Throughout his storied career, Aswath Damodaran has searched for the universal key to demystify corporate finance and valuation. Now, at last, he offers the groundbreaking answer to readers everywhere. It turns out there is a corporate lifecycle very much like our own - with unique stages of growth and decline. And just as we must learn to act our age, so too must companies. By better understanding how corporations age and the characteristics of each stage of their lifecycle, we can unlock the secrets behind any businesses behavior and optimize our management and investment decisions accordingly"-- Leseprobe 1 The Search for a Unifying Theory It is the dream of many researchers and practitioners, whatever their field of study, to come up with a construct that explains all observed behavior and a template for forecasting future behavior. In the physical sciences, that search is abetted by nature, which imposes its order on observed phenomena, allowing for cleaner tests of any theory. In the social sciences, the search has been less focused, partly because human behavior does not always follow predictable patterns. It is easy to understand why we search for universal theories that explain everything, since they offer the promise of restoring order to chaos, but that search comes with risk. The most significant risk is overreach: sensible theories get pushed to their breaking point and beyond in order to explain phenomena that they were never meant to cover. Once a theory becomes prevailing wisdom in a discipline, the temptation to use it to explain everything becomes overwhelming. The second significant risk is bias, which takes shape as a theory's most ardent supporters become selective in their assessment of evidence, choosing to see only what they want to in the data, focusing on supportive evidence and denying evidence that contradicts their theory. Eventually, if a theory has weak links or is wrong, the weight of data or evidence contradicting it will lead to its modification or abandonment-but not before its pursuit by single-minded supporters creates damage. The Search in Finance and Investing Economics is a social science, but what sets it apart from the other social sciences is the easy access that its theorists have to rich economic data and, especially, market data. Researchers and many practitioners have tried, over time, to come up with economic theories or models that explain everything from how businesses make investments to financing and dividend decisions and how investors price companies. In this section, I will lay out some of the attempts over the last seventy years to build an overarching theory of finance-and explain why they have all fallen short. Economic Theories To the extent that finance is an offshoot of economics, it stands to reason that many of the early theories in finance came from economics, with economists' work on risk aversion and utility functions animating the search for financial theories that would explain market pricing and investor return. It can be argued that modern finance had its beginnings when Harry Markowitz, with an assist from the field of statistics, put forth his work on modern portfolio theory. In effect, Markowitz drew on the law of large numbers to argue that investing across multiple risky assets that do not move together yields better return payoffs, for any given level of risk, than investing in an individual asset. The Markowitz efficient frontier provided an elegant way of compressing the investment process into a search for higher returns, with risk operating as a constraint. Figure 1.1 | The Markowitz Efficient Portfolio The power of Markowitz's theory went well beyond the optimized portfolios that it could be used to generate, since it upended the very notion of risk in markets, supplanting the old idea th...
