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| Main Author: | |
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| Format: | Preprint |
| Published: |
2025
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2511.06274 |
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| _version_ | 1866908639117180928 |
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| author | Ellerman, David |
| author_facet | Ellerman, David |
| contents | The usual formulas for the fair market valuation of a firm at time $t$ include the profits accruing to the shares at time $t$ from the use of wage or salaried labor in the future. But in employee-owned firms or partnerships, the future worker-members or partners are the residual claimants at those future times, so in those cases, the future residuals do not accrue to the current shareholder/residual-claimants. Hence any `fair market valuation' of an employee-owned firm or partnership that assumes those future residuals accrue to the current shareholder/residual-claimants is inappropriate.
Keywords: fair market valuations, residual claimants, property rights, personal rights, Miller-Modigliani valuations. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2511_06274 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Why `Fair Market Valuations' are Inappropirate for Employee-Owned Firms and Partnerships Ellerman, David Theoretical Economics Pricing of Securities The usual formulas for the fair market valuation of a firm at time $t$ include the profits accruing to the shares at time $t$ from the use of wage or salaried labor in the future. But in employee-owned firms or partnerships, the future worker-members or partners are the residual claimants at those future times, so in those cases, the future residuals do not accrue to the current shareholder/residual-claimants. Hence any `fair market valuation' of an employee-owned firm or partnership that assumes those future residuals accrue to the current shareholder/residual-claimants is inappropriate. Keywords: fair market valuations, residual claimants, property rights, personal rights, Miller-Modigliani valuations. |
| title | Why `Fair Market Valuations' are Inappropirate for Employee-Owned Firms and Partnerships |
| topic | Theoretical Economics Pricing of Securities |
| url | https://arxiv.org/abs/2511.06274 |