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Background and Motivation

  • Andreas Kemper
Chapter
Part of the Contributions to Management Science book series (MANAGEMENT SC.)

Abstract

In this world of constant changes, software markets are no exception. Growing transaction volumes of the merger-driven industry and capital markets pressure to accurately value companies increases the demand for reliable valuation in software markets. This trend is supported by an increasing number of internal capital budgeting decisions that required to determine the financial impact of strategic investments on tangible and intangible assets (Srivastava et al. 1999). Valuation in software markets has always been challenging. The reason for this challenge is their dynamic nature which is characterized by exponential growth and decay, fierce competition and highly lucrative rents. Such factors increase the danger of false evaluation and misinterpretation.1 During the Internet hype the volatility of the stocks reached a peak as software companies were among the best performing stocks, but also among the losers of the subsequent downturn.2 This volatile development caused great concerns, but financial research was not capable of explaining it despite of considerable research progress as a variety of problems have not yet been resolved (Busse von Colbe 1957; Ballwieser 1987; Moxter 1991; Copeland et al. 1996; Ross et al. 1996; Brealey and Myers 1996; Achleitner and Nathusius 2004). Conventional approaches tend to ignore the following phenomena which are particularly relevant to valuation in software markets: (Rohlfs 1974; Wiese 1990; von Westarp 2003).

Keywords

Cash Flow Complex Network Network Effect Intangible Asset Financial Research 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  1. 1.FrankfurtGermany

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