Academy of Strategic Management Journal (Print ISSN: 1544-1458; Online ISSN: 1939-6104)

Abstract

Taking Informal Liabilities into Account When Valuing a Company

Author(s): Alexander Viktorovich Shchepot'ev, Tatyana Alexandrovna Fedorova

This article substantiates the scientific and methodological approach to accounting for informal liabilities in the course of assessment procedures. As part of the study of the process of identifying and accounting for informal liabilities in the course of assessing the value of a company, the transformation of the concept of “liabilities” has been investigated. The authors examined the legal framework for the concept of liabilities, and also analyzed the possibility of accounting for valuation activities (and other analytical procedures) of informal liabilities, i.e., liabilities that do not have all the formal qualifications of the liabilities. As part of informal liabilities, hidden, imaginary and probabilistic liabilities, as well as economic analogues of liabilities, are considered. As a result of the analysis in this article, it is proved that there are liabilities that are not reflected in accounting, but ultimately affect the value of the company. Such liabilities cannot be entered into accounting and reflected in the accounting (financial) statements, as they do not meet the qualification requirements, at the same time, liabilities that are unreasonably reflected there due to an error or due to loss of liabilities may be reflected in accounting their qualifications. These liabilities are identified by the authors as informal. The authors proposed a scientific and methodological approach to identifying, classifying and determining the value of informal liabilities that companies have.

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