Sunday, March 26, 2023

Valuation is craft as opposed to art or science: Dr Damodaran addresses session at XLRI


Jamshedpur, March 26: XLRI PGDM (GM), in association with Kautilya Consult Club recently organized an exclusive virtual interactive session with Dr. Aswath Damodaran, Professor of Finance at NYU Stern School of Business, on the philosophy and craft of valuation in corporate finance.  The topic for the interactive session was “How will Valuation change in the 21st Century?”.

Prof. Aswath Damodaran is a legend in the field of corporate finance and valuation and has been called Wall Street’s “Dean of Valuation”. He is the Kerschner Family Chair in Finance Education and the author of the most widely used textbooks in B-schools across India.

Professor Damodaran spoke about how valuation is, in essence, a craft, as opposed to an art or a science, and the various biases and misconceptions that arise in the nebulous world of valuation. He also spoke about the influence of disruption on valuation, and how the global industry is gradually recognizing the intricacies of the subject.

Dr. Damodaran talked about how valuation initially wasn’t even considered a separate subject, but he started teaching the class on his own, simply responding to student interest. “Everything I know about valuation came from teaching this class,” he said, also adding that it was while valuing Amazon that he actually understood the intricacies of the topic. “Valuation is neither an art nor a science. It is a craft.” Prof. Damodaran added, talking about how it is in fact a craft that can be honed and worked upon.

The session saw over 400 participants, including faculty, present students, alumni, and professionals from across the country. Questions came thick and fast on the principles and philosophies of valuation, including the valuation of objects with no cash flow, the emerging trends post-Covid, and valuing specific companies. Prof. Damodaran ensured he answered each question with proper depth and detailed reasoning, ensuring that the session was a value-add for all those present.

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