The Size Premium is 35: Has It Grown Up?
In 1981, an academic article was published indicating that, adjusting for risk, investors might require additional returns for investing in the shares of ‘small’ companies. Since then the 'size premium' has become a familiar concept in valuation practice, including for the assessment of losses in arbitration and litigation. However, the size premium is a contentious matter and its application can have a significant effect on the quantification of value or losses. In this article, David Rogers discusses some of the key points of debate regarding the size premium.