Narrative and Numbers: The Value of Stories in Business

Hardcover | January 10, 2017

byAswath Damodaran

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How can a company that has never turned a profit have a multibillion dollar valuation? Why do some start-ups attract large investments while others do not? Aswath Damodaran, finance professor and experienced investor, argues that the power of story drives corporate value, adding substance to numbers and persuading even cautious investors to take risks. In business, there are the storytellers who spin compelling narratives and the number-crunchers who construct meaningful models and accounts. Both are essential to success, but only by combining the two, Damodaran argues, can a business deliver and sustain value.

Through a range of case studies, Narrative and Numbers describes how storytellers can better incorporate and narrate numbers and how number-crunchers can calculate more imaginative models that withstand scrutiny. Damodaran considers Uber's debut and how narrative is key to understanding different valuations. He investigates why Twitter and Facebook were valued in the billions of dollars at their public offerings, and why one (Twitter) has stagnated while the other (Facebook) has grown. Damodaran also looks at more established business models such as Apple and Amazon to demonstrate how a company's history can both enrich and constrain its narrative. And through Vale, a global Brazil-based mining company, he shows the influence of external narrative, and how country, commodity, and currency can shape a company's story. Narrative and Numbers reveals the benefits, challenges, and pitfalls of weaving narratives around numbers and how one can best test a story's plausibility.

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How can a company that has never turned a profit have a multibillion dollar valuation? Why do some start-ups attract large investments while others do not? Aswath Damodaran, finance professor and experienced investor, argues that the power of story drives corporate value, adding substance to numbers and persuading even cautious invest...

Aswath Damodaran is the Kerschner Family Chair in Finance Education and professor of finance at New York University's Stern School of Business. He is the author of Applied Corporate Finance, Fourth Edition (2014), Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, Third Edition (2012), The Little Book o...

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Format:HardcoverDimensions:296 pages, 9 × 6 × 0.98 inPublished:January 10, 2017Publisher:Columbia University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0231180489

ISBN - 13:9780231180481

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Table of Contents

Preface 1. A Tale of Two Tribes 2. Tell Me a Story 3. The Elements of Storytelling 4. The Power of Numbers 5. Number-Crunching Tools6. Building a Narrative 7. Test-Driving a Narrative8. From Narratives to Numbers 9. Numbers to Value 10. Improving and Modifying Your Narrative-The Feedback Loop11. Narrative Alterations-The Real World Intrudes12. News and Narratives 13. Go Big-The Macro Story 14. The Corporate Life Cycle 15. The Managerial Challenge 16. The Endgame Notes Index

Editorial Reviews

Damodaran takes us to the place where Joseph Campbell, Warren Buffett, and the best quantitative analyses of Nassim Taleb intersect, and his journey uncovers new value and risk missed by analysts who bias themselves by relying solely on storytelling or number-crunching. It's a hero's journey best supported by humility-and this first-person account of Aswath's own evolving narratives, analyses, and valuations of Alibaba, Amazon, Uber, Theranos, Ferrari, and more. He may have started as a quant, but Damodaran's now one of the most balanced analysts-and wonderful business and financial storytellers-writing and teaching today.