Please use this identifier to cite or link to this item:
https://hdl.handle.net/20.500.14279/29602
Title: | Optimal equity valuation using multiples: The number of comparable firms |
Authors: | Cooper, Ian A. Lambertides, Neophytos |
Major Field of Science: | Social Sciences |
Field Category: | Economics and Business |
Keywords: | Equity valuation;Multiples valuation;Valuation |
Issue Date: | 1-Jan-2022 |
Source: | European Financial Management, 2022 |
Start page: | 1 |
End page: | 29 |
Journal: | European Financial Management |
Abstract: | We examine how the accuracy of a multiples-based valuation changes as the number of comparable firms used to estimate the valuation multiple increases. Our research is motivated by a contrast between the approach followed by practitioners, who typically use a small number of closely comparable firms, and the academic literature which often uses all firms in an industry. Using a simple selection rule based on growth rates, we find that using 10 closely comparable firms is as accurate on average as using the entire cross-section of firms in an industry. The loss of accuracy from using five comparable firms rather than 10 firms or the entire industry is not great. |
URI: | https://hdl.handle.net/20.500.14279/29602 |
ISSN: | 13547798 |
DOI: | 10.1111/eufm.12405 |
Rights: | © The Authors. |
Type: | Article |
Affiliation : | London Business School Cyprus University of Technology |
Publication Type: | Peer Reviewed |
Appears in Collections: | Άρθρα/Articles |
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