Valuing High Technology Growth Firms

Journal of Business Economics / Zeitschrift für Betriebswirtschaft (2013), Vol. 83, pp. 947-984

44 Pages Posted: 16 Jun 2012 Last revised: 3 Feb 2016

See all articles by Jan Klobucnik

Jan Klobucnik

University of Cologne

Soenke Sievers

TRR 266 Accounting for Transparency; Paderborn University

Date Written: January 4, 2013


For the valuation of fast growing innovative firms Schwartz/Moon (2000, 2001) develop a fundamental valuation model where key parameters follow stochastic processes. While prior research shows promising potential for this model, it has never been tested on a large scale dataset. Thus, guided by economic theory, this paper is the first to design a large-scale applicable imple-mentation on around 30,000 technology firm quarter observations from 1992 to 2009 for the US to assess this model. Evaluating the feasibility and performance of the Schwartz-Moon model reveals that it is comparably accurate to the traditional sales multiple with key advantages in valuing small and non-listed firms. Most importantly, however, the model is able to indicate severe market over- or undervaluation from a fundamental perspective. We demonstrate that a trading strategy based on our implementation has significant investment value. Consequently, the model seems suitable for detecting misvaluations as the dot-com bubble.

Keywords: Schwartz-Moon model, market mispricing, empirical test, company valuation, trading strategy, speculative bubbles

JEL Classification: G11, G12, G17, G33

Suggested Citation

Klobucnik, Jan and Sievers, Soenke, Valuing High Technology Growth Firms (January 4, 2013). Journal of Business Economics / Zeitschrift für Betriebswirtschaft (2013), Vol. 83, pp. 947-984, Available at SSRN: or

Jan Klobucnik

University of Cologne ( email )

Cologne, 50923

Soenke Sievers (Contact Author)

TRR 266 Accounting for Transparency ( email )

Warburger Straße 100
Paderborn, 33098

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098


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