Valuation Challenges in Stranded Asset Scenarios: A Risk Discourse of Evidence From the UK

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Author(s): Posi Olatubosun (University of the West of Scotland, UK)and Sinem Derindere Köseoğlu (Independent Researcher, Turkey)
Copyright: 2020
Pages: 18
Source title: Valuation Challenges and Solutions in Contemporary Businesses
Source Author(s)/Editor(s): Sinem Derindere Köseoğlu (Independent Researcher, Turkey)
DOI: 10.4018/978-1-7998-1086-5.ch009

Keywords: Business & Management / Business and Organizational Research / Business Science Reference / Risk Management & Analysis

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Abstract

This chapter investigates the challenges faced by sell-side analysts in engaging with companies with material stranded assets through the lens of Becksian risk society theory. The research unravels the usefulness of sustainability reports in deriving the intrinsic value of energy companies in the UK, and whether they take Environmental Social and Governance (ESG) factors into consideration in doing so. Qualitative data were collected via dual methods comprising longitudinal participant observation at IR meetings and interview of sell-side analysts and institutional shareholder. Findings indicate dissatisfaction with the existing risk reporting system is a key factor in divestment decisions and asset stranding. The growing Responsible Investment (RI) awareness notwithstanding, the inadequate risk reporting system continues to represent a major source of agitation amongst shareholders and analysts, making the overhaul of the current financial reporting system inevitable.

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Valuation Challenges in Stranded Asset Scenarios: A Risk Discourse of Evidence From the UK

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