BUSINESS VALUATIONS: ETHICS AND FAITH 1
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Business Valuations: Ethics and Faith
Jason D. Roseberry
Liberty University
BUSI 534 Business Valuation
Dr. Richard Fendler
October 16, 2020
BUSINESS VALUATIONS: ETHICS AND FAITH 2
Business Valuations: Ethics and Faith
Business valuation is a field of academic study and applied practice that combines
detailed financial and data analysis to arrive at an unbiased opinion of value for private and
public business entities using the income, market and asset approaches. The academic field aims
at evaluating and refining the approaches to business valuation, as well as the professional
conduct standards of practitioners with the goal of improving the reliability of business
valuations. The goal of this paper is to provide an overview of the field of business valuation and
its significance to general business, as well as a discussion of ethical standards for business
valuation analysts. Finally, the paper will examine how business valuation relates to God’s
design and how the integration of Biblical guidance ensures ethical conduct by valuation
analysts.
Overview, Significance and Ethical Standards
Business valuation is the practice of assigning value to both income-producing and
defunct assets (Hitchner, 2017). Informed by the a standard of value and specific purpose for
conducting the valuation, valuation professionals analyze financial data and apply one or more of
the income, market and asset approaches to arrive at an unbiased estimate of value (Hitchner,
2017). Business valuations, in one form or another, are required for essentially any business
transaction and the resulting estimate of value can have a major impact on the lives of all
shareholders and stakeholders. The opinion of a business valuation professional can result in
large swings in shareholder value, which could range from thousands to tens of millions of
dollars or more, making the industry immensely significant to business in general. While the
industry bears great significance in the business world, that significance transfers an enormous
amount of responsibility and trust to valuation professionals who must work diligently to be
good stewards of the trust conferred to them by clients.
BUSINESS VALUATIONS: ETHICS AND FAITH 3
Given the wide range of reasons for a business appraisal, accuracy and reliability for the
valuation industry is of critical importance and The Uniform Standards of Professional Appraisal
Practice (USPAP) standards were created to provide industry guidance and standardization
(Hitchner, 2017). USPAP standards not only improve reliability and consistency for the industry,
but also serve to encourage valuation professionals to conduct themselves ethically and with
integrity. Arguably one of the most important rules provided by the USPAP standards is the
Competency Rule, which provides that analysts must possess adequate knowledge and
experience to complete any engagement (Hitchner, 2017; Roach, 2017). The Competency Rule
also requires the disclosure of any shortfalls in knowledge or experience while allowing the
analyst to remedy any deficiency through personal learning or acquiring the knowledge through
other professionals as an alternative to withdrawing from the assignment (Hitchner, 2017; Roach,
2017). USPAP standards also outline conduct guidelines in the Ethics Rule, which addresses
Conduct, Management and Confidentiality (Hitchner, 2017). Analysts comply with the Ethics
Rule by conducting unbiased assignments, disclosing any compensation given to obtain said
assignment and complying with all confidentiality and privacy laws that apply (Hitchner, 2017;
Rawson, 2019).
God’s Design and Biblical Integration
In appearance, many business-related fields may seem to be misaligned with a Biblical
worldview, most especially those involving the creation and assessment of shareholder value or
wealth. In practice, closely considering the roles of those tasked with creating value and fairly
assessing that value reveals that they involve both service and stewardship, which are closely
integrated to a Biblical worldview and God’s Design. Valuation analysts are entrusted in service
of their clients as stewards and God’s expectation is that stewards act with integrity and strive to
BUSINESS VALUATIONS: ETHICS AND FAITH 4
reach a higher standard of excellence in all they do, which parallels the USPAP guidelines for
ethical behavior for valuation professionals (Keller & Alsdorf, 2012). Similarly, the Bible
instructs throughout that fair dealing, honesty and integrity are God’s expectations for humans
and that Christians are to elevate themselves to a higher standard in all endeavors (Keller &
Alsdorf, 2012). The importance of these expectations cannot be overstated, as the Bible teaches
“A false balance is an abomination to the Lord, but a just weight is His delight” (English
Standard Version Bible, 2001, Proverbs 11:1). Dishonest and unethical behavior is more than
simply bad, it is an abomination in God’s eyes, but ethical conduct delights Him meaning honest
valuation professionals please God.
Another major theme, accountability, recurs frequently throughout the Bible and is listed
as mankind’s final responsibility, stating “So, then, each of us will give an account of ourselves
to God” (English Standard Version Bible, 2001, Romans 14:12). As another point of Biblical
integration, the role of business valuation professionals could be described at the most basic level
as providing an honest and accurate account to God and their clients making the honest
execution of that role an example of Godliness. Additionally, the second chapter of Genesis
shares that God continued to work as a Provider in service to humans even after Creation, which
is called Providence (English Standard Version Bible, 2001; Keller & Alsdorf, 2012). Analysts
working in service to their clients is yet another example of integration with a Biblical
worldview and honoring God. Given the many points of intersection between the practice of
business valuation and the Christian faith, it stands to reason that valuation analysts who follow
Biblical guidance will naturally comply with the ethical standards outlined in the USPAP and, in
doing so, will exemplify Godliness and honor God through their work.
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Conclusion
As both an applied practice and academic field, business valuation requires often
complex financial analysis to be interpreted into a reliable and unbiased estimate of value for the
subject assets. Valuations are nearly ubiquitous in business transactions, which makes the
industry highly significant in general business and places a heavy responsibility on analysts to
ethically produce reliable valuation reports. The role of a business valuation analyst is one that
requires significant trust and analysts become stewards in service to their clients in any accepted
engagement. The ethical standards outlined in the USPAP closely parallel characteristics taught
in the Bible that are highly prized by God, which are honesty, integrity, fair dealing, service,
good stewardship and accountability. The parallels of business valuation ethical standards and
the Bible’s instruction for Christian conduct both demonstrate that the industry aligns closely
with God’s design and a Biblical worldview, as well as holds up practitioners who perform their
duties in good faith as an honor to God and examples of Godliness.
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References
English Standard Version Bible. (2001). ESV Online. https://esv.literalword.com/
Hitchner, J. (2017). Financial valuation: Applications and models (4th ed.). Hoboken, NJ: Wiley.
ISBN 978-1-119-28660-8
Keller, T. J., & Alsdorf, K. L. (2012). Every good endeavor: Connecting your work to God's
work. New York, N.Y.: Dutton.
Rawson, R. G. (2019). Effective Bank Valuation Programs-An Examiner's Perspective.
Appraisal Journal, 87(2). https://search-proquest-
com.ezproxy.liberty.edu/docview/2268971315?pq-origsite=summon
Roach, S. (2017, November 28). Filling in the gaps with uspap’s competency rule. International
Society of Appraisers. https://www.isa-appraisers.org/about/blog/details/323/filling-in-
the-gaps-with-uspap-competency-rule
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