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Pastimes : Ask Mohan about the Market
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To: Defrocked who wrote (12397)12/26/1997 11:03:00 PM
From: Investor2  Read Replies (1) of 18056
 
RE: "In the last week BOJ allowed valuation based on the book value of the companies in which the banks and financial institutions are invested, ..."

I am well aware of the corporate financial "games" that can be played in determining the book value, especially the value of plant, equipment, ongoing research, etc. I've been asked to partake in said "game" on numerous occasions as part of my corporate function. (The games are common in the USA, too.)

Notwithstanding the above, current market valuations are typically several times book value; i.e., price-to-book value is often well above 1.0. I would guess that this is also true in Japan. So, if the stockholder has the choice of valueing the holdings at book or market, isn't it likely that market will be higher?

Best wishes,

I2
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