Financial Markets and Portfolio Management

, Volume 31, Issue 2, pp 181–199 | Cite as

A note on the valuation of asset management firms

  • Juha Joenväärä
  • Bernd SchererEmail author


Market capitalization relative to assets under management is often used to value asset management firms. Huberman’s (2004) dividend discount model implies that cross-sectional variations in this metric are explained by cross-sectional differences in operating margins, and yet we find no evidence of this in our data set. We show that a superior model—inspired by the work of Berk and Green (2004)—includes also the level of fees as an explanatory variable. This approach dramatically increases the fit of our valuation model and casts doubt on the relevance of the so-called Huberman puzzle.


Asset management firm Valuation Revenues Operating margins 

JEL Classification



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Copyright information

© Swiss Society for Financial Market Research 2017

Authors and Affiliations

  1. 1.University of OuluOuluFinland
  2. 2.Imperial College LondonLondonUK
  3. 3.Deutsche Asset ManagementFrankfurtGermany
  4. 4.EDHEC RiskNiceFrance
  5. 5.WU WienViennaAustria

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