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Title: The entrepreneurial social discount rate: risk premium and loss aversion in new ventures
Author: Ceballos Hornero, David
Mongrut Montalván, Samuel
Keywords: Emprenedoria social
Risc (Economia)
Social entrepreneurship
Issue Date: 10-Mar-2021
Publisher: Instituto Mexicano de Ejecutivos de Finanzas
Abstract: We derive a mathematical extension of the social discount rate (SDR) in such a way that we can valuate intergenerational startups financed with personal and government funds at the aggregate level. The results imply that the precise determination of the SDR can change the financial priority of investment. Therefore, we recommend government officials to include factors of economic growth (wealth effect), intergenerational prevention (precautionary effect), loss aversion, and the specific risk of the business in the valuation of new ventures and in the estimation of the social discount rate to be more representative of the social utility. Our contribution lies in including a risk premium from the firm's average non-systematic risk and the loss aversion of a representative investor in estimating the SDR.
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It is part of: Revista Mexicana de Economía y Finanzas, 2021, vol. 16, num. 4, p. e610
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ISSN: 2448-6795
Appears in Collections:Articles publicats en revistes (Matemàtica Econòmica, Financera i Actuarial)

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