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Comparable Valuation Method - A New Approach. Case Study: A Romanian Flexographic Printing Firm

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Author Info

  • Juhász Jácint

    ()
    (Universitatea Babes-Bolyai, Economice si Gestiunea Afacrilor)

  • Kovács Imola

    ()
    (Universitatea Babes-Bolyai, Economice si Gestiunea Afacrilor)

  • Kovács Ildikó

    ()
    (Universitatea Babes-Bolyai, Economice si Gestiunea Afacrilor)

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    Abstract

    This study presents the valuation scheme of a flexographic printing industry firm. The industry, the technology used and most importantly the firm being young ones, it is not possible to use the classical comparable valuation methods. The new approach in this matter is to use as benchmark financial ratios not those related to the price of the firm (as P/E, P/S, P/BV, P/CF, P/CAPEX), but those related to the structure of the income statement, financial and operating leverage using 13 Romanian and 6 Hungarian reference firms' data. Our main contribution to this line of research is to solve the problem of lack of reference data regarding the price, the benchmark companies not being listed on any stock exchange.

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    File URL: http://anale.steconomiceuoradea.ro/volume/2010/n2/089.pdf
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    Bibliographic Info

    Article provided by University of Oradea, Faculty of Economics in its journal The Journal of the Faculty of Economics - Economic.

    Volume (Year): 1 (2010)
    Issue (Month): 2 (December)
    Pages: 571-577

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    Handle: RePEc:ora:journl:v:1:y:2010:i:2:p:571-577

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    Postal: Universitatii str. 1, Office F209, 410087 Oradea, Bihor
    Phone: +40259408799
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    Web page: http://anale.steconomiceuoradea.ro/
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    Related research

    Keywords: mergers and acquisitions; corporate valuation; free cash flow; comparable valuation method; benchmarking;

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    References

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    1. Fernández, Pablo, 2002. "Valuation using multiples. How do analysts reach their conclusions?," IESE Research Papers D/450, IESE Business School.
    2. Gilson, Stuart C & Hotchkiss, Edith S & Ruback, Richard S, 2000. "Valuation of Bankrupt Firms," Review of Financial Studies, Society for Financial Studies, vol. 13(1), pages 43-74.
    3. Jing Liu, 2002. "Equity Valuation Using Multiples," Journal of Accounting Research, Wiley Blackwell, vol. 40(1), pages 135-172, 03.
    4. Ingolf Dittmann & Christian Weiner, 2005. "Selecting Comparables for the Valuation of European Firms," SFB 649 Discussion Papers SFB649DP2005-002, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    5. Mara Faccio & Ronald W. Masulis, 2005. "The Choice of Payment Method in European Mergers and Acquisitions," Journal of Finance, American Finance Association, vol. 60(3), pages 1345-1388, 06.
    6. Asquith, Paul & Mikhail, Michael B. & Au, Andrea S., 2005. "Information content of equity analyst reports," Journal of Financial Economics, Elsevier, vol. 75(2), pages 245-282, February.
    7. Graham, John R. & Harvey, Campbell R., 2001. "The theory and practice of corporate finance: evidence from the field," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 187-243, May.
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