Insight

Revisiting volatility assumptions under ASC 718

FAQs from KPMG’s Valuation practice on recent differences between historical and implied volatility measures.

Kevin Voigt

Kevin Voigt

Partner, National Service Line Leader, Economic & Valuation Services, KPMG US

+1 313-230-3359

Market volatility increased significantly in March 2020 due to the COVID-19 pandemic. This recent spike in volatility may lead to significant differences between historical and implied volatility measures. As a result, questions may arise regarding the treatment of the volatility assumption in valuation analyses, such as those performed under Accounting Standards Codification 718, Compensation – Stock Compensation (ASC 718). KPMG’s Valuation practice has created some valuation insights answering some of the more common questions.