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Choosing Valuation Models in the UAE

In: ICT for a Better Life and a Better World

Author

Listed:
  • Khaled Aljifri

    (United Arab Emirates University)

  • Hafiz Imtiaz Ahmad

    (New York Institute of Technology)

Abstract

This study aims to empirically examine the valuation models used by UAE investment analysts. A questionnaire and interviews were used to answer its research questions. Thirty-five investment analysts, in cooperation with the CFA Society Emirates, participated in the questionnaire. The sample covered most of the analysts who have professional qualifications such as CFA and CAIA (coupled with an academic degree such as the MBA) and have an average of more than eight years of experience in the relevant sectors. Descriptive and comparative analysis was employed in this study. The results reveal that discounted cash flow and P/E ratios are the most preferred valuation methods used by these analysts. For the accounting variables used in this study, the analysts perceived free cash flow and operating cash flow to be the most important variables. The results also show that the analysts perceive the solvency ratios (i.e., gearing ratio and interest cover) and liquidity ratio to be the most important ratios. The study concludes that the analysts in the UAE use both sophisticated valuation models and unsophisticated valuations models, with a preference for cash flow models.

Suggested Citation

  • Khaled Aljifri & Hafiz Imtiaz Ahmad, 2019. "Choosing Valuation Models in the UAE," Lecture Notes in Information Systems and Organization, in: Youcef Baghdadi & Antoine Harfouche (ed.), ICT for a Better Life and a Better World, pages 191-203, Springer.
    • Handle: RePEc:spr:lnichp:978-3-030-10737-6_13
    DOI: 10.1007/978-3-030-10737-6_13
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