Method

Abstract

This chapter analyses the phenomenon of “positive valuation of losses” in companies of the new economy in the US. We start by analysing the life-cycle effect of those companies. Because the value of a company is a function of the value of the current assets and the net present value of future growth opportunities, we examine the pattern of the evolution of the variables investments in total assets, R&D and advertising over sales and/or debt in the short and medium to long term. We also include in the analysis the ratio market to book value (MVE/BVE). Based on the trend analysis, we conclude that the main source of value of net firms and the non-net firms (match sample), still belong to the future growth opportunities held by these companies.