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Businesses have to make critical commercial decisions under uncertainty. At Cardinal Economics and Finance, we use financial economics and sophisticated analytical techniques to help clients make these decisions.

Our team has worked on economics and finance issues with listed and unlisted corporations, law firms, government agencies and regulators.

Our Disciplines

We help companies with their biggest challenges – market strategies, regulatory reviews, competition inquiries.  And we help governments design innovative policies and regulatory systems. At Cardinal Economics and Finance, our expertise is in the practical application of theory and empirical evidence to four areas of business decision-making.

Valuation
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We are at the forefront of valuation. We apply theory and empirical evidence to ensure we apply the right valuation approach to the task at hand. Often this involves developing new valuation methods using numerical techniques. This matters because the distribution of possible payoffs to investors is a source of value-relevant information that is too often ignored.

We have experience in the implementation, research and teaching of the following:

  • Discounted cash flow valuation
  • Multiples-based valuation
  • Real options valuation
Risk & Return
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Understanding the trade-offs between risk and return is fundamental to the success of any business. Our work helps investors, businesses, governments and regulators. A comprehensive understanding of risk comprises three parts. We need to assess, manage and price the underlying business and financial risks

A comprehensive understanding of risk comprises three parts. We need to assess, manage and price the underlying business and financial risks.

  • Risk assessment means quantifying the key triggers to an adverse event, whether that be at the macro level (e.g. recession, currency shock, interest rate shift) or the micro level (e.g. asset failure, development overrun)
  • Management means determining which risks can be managed with contracts and insurance
  • All contracts are incomplete so pricing residual risk remains the only way investors ensure that returns are at least commensurate with residual exposure
Litigation Support
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We have provided litigation support to a range of clients, in courts and tribunals. Our advice includes providing expert reports and submissions with comprehensive and rigorous quantitative detail and acting as expert witnesses in court.

We provide clients, courts and tribunals with analysis that make sense of these components of decision-making.

  • Finance theory provides a useful framework for thinking about risk, return and value, and for ensuring that all assumptions are considered in a consistent and complete manner.
  • Empirical evidence provides the large-sample basis for conclusions.
  • Common sense does not imply conclusions in itself but tells us where to look. If common sense conflicts with theory or evidence we need to understand why?
Regulation
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Regulation is intended to help markets function efficiently. It goes beyond writing a set of rules. It is the implementation of those rules and the engagement of businesses, consumers and investors that leads to well-functioning markets.

Our advice has encompassed all of the key elements of regulatory regimes including:

  • The development of rules and guidelines
  • The design and implementation of appeal mechanisms
  • Impacts on market participants’ incentives from the overarching system of regulation and the form of control (e.g. revenue cap vs. price cap)
  • The treatment of all elements of building block models, namely asset valuation; cost of capital; cost allocation; assessment of efficient costs; design of incentive mechanisms; taxation; and total service long run incremental cost models.

At Cardinal Economics & Finance, we are at the forefront of valuation. We apply theory and empirical evidence to ensure we apply the right valuation approach to the task at hand.

Jason Hall, PhD 
Director, Cardinal Economics and Finance

Latest

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Local and global

Cardinal Economics and Finance is a wholly-owned subsidiary of Frontier Economics Pty Ltd, headquartered in Australia and with more than thirty consultant economists across offices in Australia and Singapore. Our presence and experience covers many jurisdictions, but our focus is the USA and Canada. Head office is Ann Arbor, Michigan.

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