A Note on the Valuation of Asset Management Firms

Juha Joenväärä, Bernd Scherer

Research output: Contribution to journalArticleScientificpeer-review


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.
Original languageEnglish
Pages (from-to)181-199
JournalFinancial Markets and Portfolio Management
Publication statusPublished - 2017
MoE publication typeA1 Journal article-refereed


  • Asset management firm
  • Valuation
  • Revenues
  • Operating margins


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