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| The Size Effect: New Research (2238Q) |
Course CPE: 1 hour
Field(s) of Study: Finance–1 hr
Program Level: Update
Prerequisites: Participants need a background in the subject area and desire to keep current.
Advanced Preparation: None
Delivery Method: QAS Self-Study |
Item
Number: 25BV1205TSE
Shipping Weight: 0lbs. 0oz. |
| Price:
$99.00 |
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Recording Date: December 5, 2025
Presenter: Carla Nunes and James Harrington
Program Description:
When estimating the cost of equity for small businesses, there is a lot of confusion about what the size effect represents and the so-called "size premium". This session will (1) clarify the concept of size premium (i.e., beta-adjusted) vs. the small-stock premium over large stocks; (2) clarify the confusion between geometric and arithmetic returns, and the corresponding impact on the size premium; (3) provide a recent academic research update; and (4) present preliminary results of new Kroll analysis on the size effect, which includes a comparison with the Fama-French size data.
Takeaways:
Finance and valuation professionals should be able to distinguish different assertions made on the existence of the size effect and be able to select appropriate size premium computations when developing a discount rate for small companies.
After completing this course, you will be able to:
- Identify recent academic research on the size effect
- Recognize the difference between computing a size premium using geometric and arithmetic averages, and the impact of adjusting for portfolio betas (i.e., size premium vs. small stock premium differences)
- Differentiate between sources of size effect studies when developing cost of equity capital estimates for small companies
For more information regarding refund or concerns, please contact our offices at (800) 677-2009.
The Consultants’ Training Institute (CTI) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. |
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