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New Evidence on the Value Additivity Principle

Published online by Cambridge University Press:  06 April 2009

Malcolm R. Burns
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Abstract

This paper tests the Value Additivity Principle (VAP) of financial assets with the pricing of Standard Oil securities in 1912. The results are somewhat mixed: the VAP does not generally describe the daily prices of equivalent Standard Oil portfolios, but it accurately describes their average market values; and the portfolio values display convergent adjustment behavior that tends to equalize them quite rapidly. On balance, these findings are consistent with the VAP.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 22 , Issue 1 , March 1987 , pp. 65 - 77
Copyright
Copyright © School of Business Administration, University of Washington 1987

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