Damages Measurement for New Economy Firms

In forensic accounting practice, damages are calculated using before-and-after, yardstick and market model methods. As the economy moves toward an e-business environment, there are new challenges to forensic accountants in computing damages. In using the market model, the plaintiff's forensic accoun...

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Journal Title: Journal of Forensic Accounting Vol. 3; no. 2; pp. 253 - 262
Author: Wayne Bremser
Format: Article
Language: English
Published: 2002
Subjects:
Summary: In forensic accounting practice, damages are calculated using before-and-after, yardstick and market model methods. As the economy moves toward an e-business environment, there are new challenges to forensic accountants in computing damages. In using the market model, the plaintiff's forensic accountant and other experts will have to convince the court that their financial model reflects the firm's business model operating in a market. Using a taxonomy of e-business models can be an effective technique for positioning the firm in a market. In calculating lost profits, understanding an e-business' cost structure is complicated by IT infrastructure costs and scalability issues. If the defendant's alleged actions damaged the firm's value, the expert will have to understand the firm's business model and the firm's value creation process as a basis for preparing a financial model.
ISSN: 1524-5586