Grabowski's Take - Discount Rates, Risk, and the Future of Valuation

Thanks for listening. It takes just a couple of minutes to share your feedback. You can also contact us directly at [e-mail] Is CAPM still the gold standard for determining cost of capital—or is it time for a rethink? Valuation expert Roger Grabowski explores why CAPM often fails in practice and how shifting toward investment-specific risk provides a more accurate framework for real-world decision-making. We also discuss multi-factor models, ASC 820 implications, and practical strategies for communicating risk concepts to courts and auditors. Key Takeaways CAPM's Limitations: Decades of research show CAPM struggles to predict returns accurately, making it less reliable for valuation in practice.Investment-Specific Risk: Moving beyond company-specific risk to focus on risks tied to cash flows offers a clearer, more relevant approach.Aligning Theory with Practice: Modified CAPM, multi-factor models, and ASC 820's exit value concept help valuation professionals better reflect market realities and communicate effectively. Continue reading to learn about key resources available at AICPA-CIMA.com to improve your valuation analyses. Guest: Roger Grabowski, FASA, Managing Director (ret.), Kroll LLC, Valuation Advisory Services Host: Josh Shilts, CPA/ABV/CFF/CGMA, Director, Forensic & Valuation Services, Dean Dorton RESOURCES FOR FURTHER EXPLORATION If you're using a podcast app that does not hyperlink to the resources, please visit our podcast platform to access the show notes with direct links. JOIN: The FVS Engage365 Member Community to collaborate with fellow AICPA® members, exchange ideas, and shape the future of the profession together. EARLY CAREER GUIDANCE: Welcome to a career in forensic and valuation services Exclusive content available with AICPA FVS Section membership: Click here to join this active community of your FVS peers. You will get 16 credits of complimentary CPE and access to rich technical content FVS webcast archive | Developing discount rates for fair value reportingFVS Practice Aid | Discount Rates, Risks, and Uncertainty in Economic Damages Calculations The FVS Valuation Podcast archives Discounted Cash Flows with Roger Grabowski Valuation in a Climate of Uncertainty Reconciling Discount Rates for Intangible Asset Valuation in PPAs Macroeconomic Update 2025 - Cost of Capital and Valuation Impact LEARN MORE ABOUT THE FOLLOWING AICPA CREDENTIALS: Accredited in Business Valuation (ABV®) – Visit the home page and check out the ABV infographic Certified in the Valuation of Financial Instruments (CVFI®) – Visit the home page and check out the CVFI infographic Certified in Financial Forensics (CFF®) - Visit the home page and check out the CFF infographic This is a podcast from AICPA & CIMA, together as the Association of International Certified Professional Accountants. To enjoy more conversations from our global community of accounting and finance professionals, explore our network of free shows here. Your feedback and comments are welcomed at [e-mail]