Details

Measuring Business Interruption Losses and Other Commercial Damages


Measuring Business Interruption Losses and Other Commercial Damages


2. Aufl.

von: Patrick A. Gaughan

109,99 €

Verlag: Wiley
Format: EPUB
Veröffentl.: 07.08.2009
ISBN/EAN: 9780470526170
Sprache: englisch
Anzahl Seiten: 528

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Beschreibungen

An updated explanation of the methodology for how lost profits should be measured Now fully revised and updated, focused on commercial litigation and the many common types of cases, this is the only book in the field to explain the complicated process of measuring business interruption damages. The book features an easy to understand and apply, step-by-step process for how losses should be measured so as to be accurate and reliable and consistent with the relevant laws. With a new chapter on the economics of punitive damages, the new edition also explains detailed methods for measuring damages in contract litigation, intellectual property lawsuits, antitrust, and securities cases. This new Second Edition incorporates the latest developments in the fields of economics and accounting, while also integrating the most current changes in case law. Here's what you will find Each chapter includes new materials and updated content Added websites for sources of data Includes a website for updated tables that can be utilized by readers A section of the new cases involving Daubert challenges to economists Includes methods on how to do industry research A new section covering the equity risk premium and the various recent research studies, which set forth the debate on what the premium should be Containing exhibits, tables, and graphs, new cases involving Dauber, how to do industry research, equity risk premium, research studies on the marketability discount, anti-trust, punitive damages, and more, Measuring Business Interruption Losses and Other Commercial Damages, Second Edition incorporates the relevant literature and research that has come out in this field over the past four years.
Preface xv CHAPTER 1 Introduction 1 Development of the Field of Litigation Economics 1 Development of the Field of Forensic Accounting 2 Qualifications of an Economic Expert 4 Qualifications of an Accounting Expert on Damages 7 Interdisciplinary Nature of Commercial Damages Analysis 7 Difference between Disciplines of Economics and Finance 10 Finding a Damages Expert 10 Critically Reviewing a Potential Expert’s Curriculum Vitae 12 Getting the Damages Expert on Board Early Enough 17 Courts’ Position on Experts on Economic Damages 18 Standards for Admissibility of Expert Testimony 21 Expert Reports 25 Defense Expert as a Testifying Expert, Not Just a Consultant 28 Quantitative Research Evidence on the Benefits of Calling a Defense Expert 30 Treatment of the Relevant Case Law 31 Legal Damage Principles 31 Other Types of Damages Cases 37 Summary 40 References 41 CHAPTER 2 Economic Framework for the Lost Profits Estimation Process 45 Foundation for Damages Testimony 45 Role of Assumptions in Damages Analysis 46 Hearsay 47 Approaches to Proving Damages 49 Causality and Damages 54 Using Demonstrative Evidence to Help the Client Understand Its Losses or Lack of Losses 61 Causality and Loss of Customers 62 Graphical Sales Analysis and Causality 63 Causality and the Special Case of Damages Resulting from Adverse Publicity 65 Length of Loss Period: Business Interruption Case 66 Length of Loss Period: Plaintiff Goes Out of Business 71 Length of Loss Period: Breach of Contract 72 Methodological Framework 73 Summary 75 References 77 CHAPTER 3 Economic Analysis in Business Interruption Loss Analysis 79 Economic Fluctuations and the Volume of Litigation 79 Macroeconomic Analysis 80 Definition of a Recession 80 Measuring Economic Growth and Performance 81 Business Cycles and Economic Damages 89 Using More Narrowly Defined Economic Aggregates 90 Overstatement of Inflation Statistics 98 Regional Economic Trends 100 International Economic Analysis 104 Macroeconomic and Regional Economic Analysis and the Before and After Method 106 Summary 107 References 108 P1: OTA/XYZ P2: ABC CHAPTER 4 Industry Analysis 111 Sources of Industry Data 111 New North American Industry Classification System 118 Retaining an Industry Expert 125 Conducting an Industry Analysis 126 Relating Industry Growth to the Plaintiff’s Growth 130 Other Industry Factors 131 Yardstick Approach and Industry Analysis 134 Summary 138 References 138 CHAPTER 5 Projecting Lost Revenues 141 Projections versus Forecasts: Economic versus Accounting Terminology 141 Using Graphical Analysis as an Aid in the Forecasting Process 142 Methods of Projecting Lost Revenues 147 Curve-Fitting Methods and Econometric Models 152 Understanding Regression Output and Diagnostics 155 Common Problems Affecting Regression Models 156 Confidence in Forecasted Values 164 Frequency of the Use of Econometric Techniques in Commercial Litigation 167 Seasonality and the Forecasting Process 175 Capacity Constraints and Forecasts 177 Sensibility Check for the Forecasted Values 178 Projecting Lost Sales for a New Business 179 Projecting Losses for an Unestablished Business 184 Summary 187 Appendix 188 References 196 CHAPTER 6 Cost Analysis and Profitability 199 Presentation of Costs on the Company’s Financial Statements 199 Measures of Costs 201 Profit Margins and Profitability 201 Appropriate Measure of Profitability for a Lost Profits Analysis 201 Burden of Proof for Demonstrating Costs 207 Fixed versus Variable Costs 207 Using Regression Analysis to Estimate Costs as Opposed to More Basic Methods 210 Pitfalls of Using Regression Analysis to Measure Incremental Costs 211 Possible Nonlinear Nature of Total Costs 211 Limitations of Using Unadjusted Accounting Data for Measuring Incremental Costs 215 Treatment of Overhead Costs 218 Must a Plaintiff Be a Profitable Business to Recover Damages? 223 Mitigation of Damages 224 Cash Flows versus Net Income: Effects on the Discounting Process 230 Recasted Profits 231 Firm-Specific Financial Analysis 237 Cross-Sectional versus Time Series Analysis 239 Summary 239 References 240 CHAPTER 7 Time Value of Money Considerations 243 Determination of Interest Rates 244 Types of Interest Rates 244 Financial Markets: Money Market versus Capital Market 245 Money Market Securities and Interest Rates 245 Capital Market 247 Real versus Nominal Interest Rates 248 Determinants of Interest Rates 252 Prejudgment Losses 258 Components of the Cost of Capital 260 Discounting Projected Future Profits 267 Common Errors Made in Discounting by Damages “Experts” 273 Summary 279 References 280 CHAPTER 8 Business Valuations 285 Legal Standard for Business Valuations in Business Interruption and Business Failure Lawsuits 285 Lost Profits versus Lost Business Value 287 Business Valuation Framework 289 Theoretical Value of a Business 290 Public versus Private Companies 291 Business Valuation Parameters 292 Revenue Ruling 59-60 and Factors to Consider in Valuation 292 Valuation Concepts 295 Most Commonly Used Valuation Methods 298 Capitalization of Earnings 302 Comparable Multiples 303 Adjustments and Discounts 307 Summary 312 References 313 CHAPTER 9 Intellectual Property 315 Patents 315 Computation of Damages for Patent Infringement 318 Legal Requirements Necessary to Prove Lost Profits 318 Lost Profits Due to Price Erosion 322 Lost Profits Due to Changing Cost Conditions 325 Royalty Arrangements 326 Copyrights 333 Measurement of Damages for Copyright Infringement 336 Trademarks 339 Trade Secrets 345 Summary 347 References 349 CHAPTER 10 Securities-Related Damages 353 Key Securities Laws 353 Damages in Securities Litigation 358 Fraud-on-the-Market 359 Comparable Index Approach 364 Event Study Approach 367 Broker Raiding Cases 378 Merger-Related Damages 383 History of Mergers in the United States 384 Client-Broker Claims 388 Churning 390 Appendix 10A: Case Study: In Re Computer Associates International, Inc. 397 References 404 CHAPTER 11 Antitrust 407 Antitrust Laws 408 Antitrust Enforcement 411 Economics of Monopoly 411 Changing Pattern of Antitrust Enforcement 416 Antitrust and the New Economy 421 Monopolization and Attempts at Monopolization 421 Market Definition and Microeconomic Analysis 426 Market Power 426 Measures of Market Concentration 428 Common Types of Antitrust Cases 430 Summary 442 References 443 CHAPTER 12 Economics of Punitive Damages 447 Evolving Position of the U.S. Supreme Court on Punitive Damages 447 Frequency of Punitive Damages 450 Frequency of Punitive Damages and the Shadow Effect of Punitive Damages 451 Purposes of Punitive Damages 452 Punishment of Corporations and Corporate Governance 453 Spillover Effects and Punishment of Corporations 454 Deterrence Theory and the Changing Litigation Environment 465 Deterrence and Regulatory Processes 467 Typical Financial Measures Used in the Determination of Punitive Damages 470 Net Worth 472 Market Capitalization 474 Uncertain Litigation Environment 480 Summary 483 References 484 Index 489
"An updated explanation of the methodology for how lost profits should be measured. Now fully revised and updated, focused on commercial litigation and the many common types of cases, this is the only book in the field to explain the complicated process of measuring business interruption damages. The book features an easy to understand and apply, step-by-step process for how losses should be measured so as to be accurate and reliable and consistent with the relevant laws." (AccountingWEB.com, February 1, 2010)
PATRICK A. GAUGHAN has published eight books, including the award-winning Mergers Acquisitions, and Corporate Restructurings, Fourth Edition, published by Wiley. He is President of Economatrix Research Associates, Inc., a firm that has conducted damages analysis for the past twenty years for corporate clients such as Airbus, GE, GM, Ford, Philip Morris, and Wyeth as well as insurance companies including Liberty Mutual, Zurich, State Farm, and many of the major law firms in the United States.
Computing damages in business interruption lawsuits requires a sound knowledge of fields such as litigation economics, forensic accounting, and law. Now, one comprehensive volume has been developed for practitioners in this field specifically for dealing with the diverse demands presented by commercial damages analysis. The only book in this field to explain the complicated process of measuring business interruption damages—whether caused by wrongful acts of defendants in lawsuits or natural disasters—Measuring Business Interruption Losses and Other Commercial Damages, Second Edition provides a comprehensive framework for how such losses should be measured. The areas covered in this updated second edition include: Recent developments in the courts on damages Selecting a damages expert and challenging an opposing expert Understanding the role of the economy in business interruptions Doing an industry analysis to support or refute loss claims Methods of projecting lost sales Computing the costs of lost sales to arrive at lost profits Discounting to present value and addressing risk This book then goes on to show how damages are measured in important specialized areas such as: Intellectual property litigation, including patent, copyright, and trademark cases Securities litigation, including fraud on the market, mergers and acquisitions, and broker-related damages Antitrust litigation, including how markets are defined and ways of measuring anticompetitive behavior Economics of punitive damages, with discussion on the various effects caused by imposing punitive damages on corporate defendants Clearly written, this major contribution's self-contained chapters are an invaluable resource for the various busy practitioners working in this area.
MEASURING BUSINESS INTERRUPTION LOSSES AND OTHER COMMERCIAL DAMAGES SECOND EDITION Computing damages in business interruption lawsuits requires a sound knowledge of fields such as litigation economics, forensic accounting, and law. Now, one comprehensive volume has been developed for practitioners in this field specifically for dealing with the diverse demands presented by commercial damages analysis. The only book in this field to explain the complicated process of measuring business interruption damages—whether caused by wrongful acts of defendants in lawsuits or natural disasters— Measuring Business Interruption Losses and Other Commercial Damages, Second Edition provides a comprehensive framework for how such losses should be measured. The areas covered in this updated second edition include: Recent developments in the courts on damages Selecting a damages expert and challenging an opposing expert Understanding the role of the economy in business interruptions Doing an industry analysis to support or refute loss claims Methods of projecting lost sales Computing the costs of lost sales to arrive at lost profits Discounting to present value and addressing risk This book then goes on to show how damages are measured in important specialized areas such as: Intellectual property litigation, including patent, copyright, and trademark cases Securities litigation, including fraud on the market, mergers and acquisitions, and broker-related damages Antitrust litigation, including how markets are defined and ways of measuring anti competitive behavior Economics of punitive damages, with discussion on the various effects caused by imposing punitive damages on corporate defendants Clearly written, this major contribution's self-contained chapters are an invaluable resource for the various busy practitioners working in this area.

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