Methodology to assess the market value of companies according to their financial and social responsibility aspects: An AHP approach

Abstract

This paper proposes a combination of the Analytic Hierarchy Process with Goal Programming for a better valuation of companies. The methodology includes the economic dimension of the company and another based on its social responsibility. A set of relative and absolute economic variables is proposed including concepts like leverage, liquidity or solvency. For the CSR dimension, we present a set of variables extracted from sustainability reports based on the Global Reporting Initiative. This way, the whole methodology relies on publicly available data and can be readily reproduced. We prove the methodology with a complex case study involving the estimation of a German real estate company that wants to foresee its market value. For that, we have analysed four comparable companies plus the target one.

Keywords:

• Firm valuation
• CSR
• GRI reports
• AHP
• GP

Acknowledgments

This research has been conducted within the research activities of the Master in Corporate Social Responsibility at the Universitat Politècnica de València (http://www.master-rsc.upv.es/).