Hi there! Do any of you know whether Professor Damodaran or anyone else has done any research on how corporate crises (e.g. major product recalls, liability issue, CEO indictments - i.e. not crises in the sense of the financial crisis) impact company valuation? Sometimes shares seem to react very strongly, other times not at all.

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anonymous · Answer

Hello, sounds like you are adressing issues related to behavioural finance. Take a look on this page: http://www.behaviouralfinance.net/ . If you are modelling with a Cash flow in excel, you can introduce a "shock" on the revenue/cost side, in order to test sensitivity.

anonymous · Answer

Also, communication and marketing theory, have most likely, also done some research on this.

anonymous · Answer

Thanks very much, I shall look into this link!

anonymous · Answer

You create your own assumptions from those corporate crises. You can increase risk and what not...