Valuation challenges in stranded asset scenarios: a risk discourse of evidence from the UK

Posi Olatubosun, Sinem Derindere Köseoğlu

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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.
Original languageEnglish
Title of host publicationValuation Challenges and Solutions in Contemporary Businesses
EditorsSinem Derindere Köseoğlu
Place of PublicationHershey, PA
PublisherIdea Group Inc
Chapter9
Pages157-174
Number of pages18
ISBN (Electronic)9781799810889
ISBN (Print)9781799810865, 1799810860, 9781799810872
DOIs
Publication statusPublished - 16 Sep 2019

Keywords

  • valuation
  • ESG
  • sustainable finance
  • stranded assets

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