Valuation Procedures for Portfolio Investments

Investment Companies are financial intermediaries between investors and investments. Investors buy shares in Investment Companies, which are entities that invest these share revenues in order to make income from dividends, received interests and capital gains on sales of investments. One of the issues an Investment Company has to address in providing useful information is the selection of valuation methods to value the company's investments for financial statement purposes. There are a number of recommendations for valuing these investments produced by\norganizations, such as EVCA, BVCA and NVCA. This thesis examines Investment Companies in Sweden, the United States\nand the United Kingdom and their valuation methods for valuing portfolio companies. The study also analyzes why different methods in certain circumstances are applied and the extent to which valuation procedures in the three countries are harmonized. The study concludes\nwith an examination on how Swedish companies' valuation methods influence the disclosure of the Net Asset Value.\nThe analysis of the theoretical and empirical findings shows that the valuation methods in Sweden are to some extent focused on EVCA's valuation guidelines. Furthermore, the procedures in the United Kingdom are congruent to the guidelines provided by the BVCA. The analysis of\nthe studied companies in the United States, indicates that the valuation procedures are vague and generally based on the companies' own principles. The result of this research also concludes that there are various degrees of standardization within the three countries, and explains how\nthese differences influence the harmonization process of valuation procedures.