Determining the Accuracy of the Companys Valuation Using  a Comparative Approach in Emerging Markets

The main agenda of this research is to find out the most appropriate multiples and select groups of comparable firms for company’s value estimation in the main industries of the following emerging countries: Brazil, Russia, India and China (BRIC). In this research we examine a sample for each country for the period since 2009 to 2013. We test the following seven financial multiples: P/S, P/E, P/BV, EV/EBITDA, EV/EBIT, EV/TA, EV/Sales. Each multiple is tested with each of the following methods of selection group of comparable firms: industry, size, growth potential and combinations: industry–size, industry–growth potential, size–growth potential. The whole market is also used as a method of selecting group of comparable firms just for comparison. As a result, we shall find the most precise multiples and methods of selecting groups of comparable firms. In addition, we consider the accuracy of using combinations of the most precise multiples. In conclusion, we find the best multiples and relevant sets of comparable firms, which demonstrate the most precise estimations of firm values. This research reveals potential of using combination of the most common financial multiples, which let us improve valuation accuracy. This article will be useful for theoretical and practical purposes. This work is unique because firstly, it covers emerging markets and secondly it proves that the combinations of financial multiples in some cases show better results.

Keywords

multiples, firm value, company value, comparative approach, emerging markets, valuation

Received

13.08.2019

Publication date

22.08.2019

Number of characters

37987

Cite

GOST	Aleksandrov Y. Determining the Accuracy of the Company's Valuation Using a Comparative Approach in Emerging Markets // Ekonomika i matematicheskie metody – 2019. – V. 55. – Issue 3 C. 109-123 [Electronic resource]. URL: https://emm.jes.su/S042473880005768-3-1 (circulation date: 19.04.2024). DOI: 10.31857/S042473880005768-3
MLA	Aleksandrov, Yaroslav "Determining the Accuracy of the Company's Valuation Using a Comparative Approach in Emerging Markets." Ekonomika i matematicheskie metody 55.3 (2019):109-123. DOI: 10.31857/S042473880005768-3
APA	Aleksandrov Y. (2019). Determining the Accuracy of the Company's Valuation Using a Comparative Approach in Emerging Markets. Ekonomika i matematicheskie metody 55(3), pp.109-123 DOI: 10.31857/S042473880005768-3

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