Betas Used by Professors: A Survey with 2,500 Answers

Abstract

We report 2,510 answers from professors from 65 countries and 934 institutions. 1,791 respondents use betas, but 107 of them do not justify the betas they use.

97.3% of the professors that justify the betas use regressions, webs, databases, textbooks or papers (the paper specifies which ones), although many of them admit that calculated betas “are poorly measured and have many problems”.

Only 0.9% of the professors justify the beta using exclusively personal judgement (named qualitative, common sense, intuitive, and logical magnitude betas by different professors).

The paper includes interesting comments from 160 professors.

We all admit that different investors may have different expected cash flows, but many of us affirm that the required return should be equal for everybody: That is a kind of schizophrenic approach to valuation.

Keywords: beta, historical beta, calculated beta, common sense

JEL Classification: G12, G31, M21