Work detail

Evaluation of Contemporary art as an alternative investment

Author: Bc. Alice Havlovicová
Year: 2020 - summer
Leaders: Mgr. Lukáš Vácha Ph.D.
Work type: Bachelors
Language: English
Pages: 66
Awards and prizes:
Abstract: This thesis investigates the investment performance of contemporary art. In
order to analyze the risks and returns of the unique art market environment,
the reader is presented with the market specifics, trends, and inefficient. The
financial performance of contemporary art is estimated by means of extended
models of hedonic regression and repeat-sales regression. Both methods allowˇs
for the treatment of volatility of the art market caused by the infrequency of
trading, resulting in two monthly contemporary art market indices. The indices are estimated based on auction results of contemporary art spanning from
2003 to 2015, including all artworks sold at least once, which presents a general
overview of the contemporary art market. In line with the academic literature
on the topic of art investment, the results suggest lower returns of contemporary
art than traditional financial assets. Volatility and Sharpe ratios differ in the
two indices. Based on the resulting price indices, we conclude that contemporary art presents moderate returns of 5% per year in real U.S. dollar terms.




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