The 'It Proposition': if something does not affect cash flows and does not affect risk, it cannot affect value; this principle should discipline valuation by requiring that any claim about value creation (e.g., from control or synergy) must specify what it will change about the company's cash flows or risk

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Speaker

Aswath Domodaran

Evidence Quote

So here's my first proposition. It's called the It Proposition. If it does not affect the cash flows and it does not affect risk, it cannot affect values.

Source

Valuation in Four Lessons | Aswath Damodaran | Talks at GoogleTalks at Google
Created: 8/11/2026, 1:45:13 AM

My Notes

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