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Influencing Factors Of Valuation Multiples Of Companies

Author

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  • Ciprian Codau

    (West University of Timisoara Romania)

Abstract

The main objective of this study is to determine the factors that influence the valuationmultiples used in the market approach in valuing companies. The analysis takes into account bothfactors related to the company and the country or stock market on which the company stocks aretraded.The database for this research was represented by a total of 1,853 companies listed on variousstock markets and the source of information was represented by Infinancials database. They wereselected based on criteria related to the availability of information and business sectors to whichthey belong. Such data base includes 15 specific industry sectors, each sector is divided into twodata sets according to the level of development of the countries of origin of the companies. Thus the1,853 companies in the database were divided into companies from developed countries andcompanies from developing countries.The independent variables considered in this analysis are: company size (quantified by sales), theinflation rate in the country of origin of the company, country risk for the company's home countryand three financial ratios considered representative by the investors in the capital market namely:EBITDA ratio, equity/assets ratio and liquidity quick ratio.

Suggested Citation

  • Ciprian Codau, 2013. "Influencing Factors Of Valuation Multiples Of Companies," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(15), pages 1-4.
  • Handle: RePEc:alu:journl:v:2:y:2013:i:15:p:4
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    References listed on IDEAS

    as
    1. Jing Liu, 2002. "Equity Valuation Using Multiples," Journal of Accounting Research, Wiley Blackwell, vol. 40(1), pages 135-172, March.
    2. repec:bla:joares:v:30:y:1992:i:1:p:94-108 is not listed on IDEAS
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    More about this item

    Keywords

    valuation multiples; company value; factors of influence; market approach; valuation.;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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