IDEAS home Printed from https://ideas.repec.org/a/ora/journl/v1y2010i2p571-577.html
   My bibliography  Save this article

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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Juhász Jácint & Kovács Imola & Kovács Ildikó, 2010. "Comparable Valuation Method - A New Approach. Case Study: A Romanian Flexographic Printing Firm," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 571-577, December.
    • Handle: RePEc:ora:journl:v:1:y:2010:i:2:p:571-577
    as

    Download full text from publisher

    File URL: http://anale.steconomiceuoradea.ro/volume/2010/n2/089.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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, June.
    2. Cheng, C S Agnes & McNamara, Ray, 2000. "The Valuation Accuracy of the Price-Earnings and Price-Book Benchmark Valuation Methods," Review of Quantitative Finance and Accounting, Springer, vol. 15(4), pages 349-370, December.
    3. 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.
    4. Sophie Manigart & Koen De Waele* & Mike Wright & Ken Robbie & Philippe Desbrières & Harry Sapienza & Amy Beekman, 2000. "Venture capitalists, investment appraisal and accounting information: a comparative study of the USA, UK, France, Belgium and Holland," European Financial Management, European Financial Management Association, vol. 6(3), pages 389-403, September.
    5. 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.
    6. 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.
    7. Peter Roosenboom, 2007. "How Do Underwriters Value Initial Public Offerings? An Empirical Analysis of the French IPO Market," Contemporary Accounting Research, John Wiley & Sons, vol. 24(4), pages 1217-1243, December.
    8. Gilson, Stuart C & Hotchkiss, Edith S & Ruback, Richard S, 2000. "Valuation of Bankrupt Firms," The Review of Financial Studies, Society for Financial Studies, vol. 13(1), pages 43-74.
    9. Jing Liu & Doron Nissim & Jacob Thomas, 2002. "Equity Valuation Using Multiples," Journal of Accounting Research, Wiley Blackwell, vol. 40(1), pages 135-172, March.
    10. Fernández, Pablo, 2002. "Valuation using multiples. How do analysts reach their conclusions?," IESE Research Papers D/450, IESE Business School.
    11. Barbara Fidanza, 2008. "The Valuation by Multiples of Italian Firms," Working Papers 14-2008, Macerata University, Department of Studies on Economic Development (DiSSE), revised Nov 2008.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. WS Nel, 2015. "An Optimal Peer Group Selection Strategy for Multiples-Based Modelling in the South African Equity Market," Journal of Economics and Behavioral Studies, AMH International, vol. 7(3), pages 30-46.
    2. 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.
    3. Frank Asche & Bård Misund, 2016. "Who’s a major? A novel approach to peer group selection: Empirical evidence from oil and gas companies," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1264538-126, December.
    4. Marc Deloof & Wouter De Maeseneire & Koen Inghelbrecht, 2009. "How Do Investment Banks Value Initial Public Offerings (IPOs)?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(1‐2), pages 130-160, January.
    5. Karel Janda, 2019. "Earnings Stability and Peer Company Selection for Multiple Based Indirect Valuation," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 69(1), pages 37-75, February.
    6. Roosenboom, Peter, 2012. "Valuing and pricing IPOs," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1653-1664.
    7. Meitner, Matthias, 2003. "Option-Style Multi-Factor Comparable Company Valuation for Practical Use," ZEW Discussion Papers 03-76, ZEW - Leibniz Centre for European Economic Research.
    8. Forte, Gianfranco & Gianfrate, Gianfranco & Rossi, Emanuele, 2020. "Does relative valuation work for banks?," Global Finance Journal, Elsevier, vol. 44(C).
    9. José Couto & Paula Brito & António Cerqueira, 2017. "The Method of Market Multiples on the Valuation of Companies: A Multivariate Approach," FEP Working Papers 586, Universidade do Porto, Faculdade de Economia do Porto.
    10. Emanuel Bagna & Enrico Cotta Ramusino, 2016. "Accounting-Based Valuation Using Market Multiples: The Case Of Cyclical Companies," DEM Working Papers Series 126, University of Pavia, Department of Economics and Management.
    11. Salmanov, Oleg & Babina, Natalia & Bashirova, Svetlana & Samoshkina, Marina, 2015. "Multiples for Valuation Estimates of Companies in the Technology Sector of Emerging Markets," MPRA Paper 112271, University Library of Munich, Germany, revised 20 Mar 2015.
    12. Yanfu Li, 2019. "Improving Analyst Target Price Performance Through Enhanced Valuation Techniques," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 13(2), pages 1-12.
    13. Barbara Fidanza, 2008. "The Valuation by Multiples of Italian Firms," Working Papers 14-2008, Macerata University, Department of Studies on Economic Development (DiSSE), revised Nov 2008.
    14. Abdul Rasheed & Muhammad Khalid Sohail & Shahab-Ud Din & Muhammad Ijaz, 2018. "How Do Investment Banks Price Initial Public Offerings? An Empirical Analysis of Emerging Market," IJFS, MDPI, vol. 6(3), pages 1-19, September.
    15. Martin Husák, 2022. "Do Damodaran's Multiples Value a Company Accurately? Evidence from Germany," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2022(3), pages 5-21.
    16. Peter Roosenboom, 2007. "How Do Underwriters Value Initial Public Offerings? An Empirical Analysis of the French IPO Market," Contemporary Accounting Research, John Wiley & Sons, vol. 24(4), pages 1217-1243, December.
    17. Yanfu Li, 2021. "Improving The Accuracy Of Estimated Intrinsic Value Through Industry-Specific Valuation Models," Review of Business and Finance Studies, The Institute for Business and Finance Research, vol. 12(1), pages 79-89.
    18. Andreea Vasiliu & Neculai Tabara, 2013. "Methods for Determining the Degree of Underestimation or Overrating of Shares Using PER Analysis," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(3), pages 84-99, June.
    19. Budi Frensidy & Ryan Joshua Pelealu & Robiyanto Robiyanto, 2020. "Analysis of Equity Valuation Models and Target Price Accuracy: An Evidence From Analyst Reports in Indonesia," SAGE Open, , vol. 10(4), pages 21582440209, October.
    20. Elif Acar & Gamze Vural & Emin Hüseyin Çetenak, 2020. "Evidence for Financial Hierarchy Theory in Capital Structure Decisions: Data from BIST Companies," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 34(1), pages 29-50.

    More about this item

    Keywords

    mergers and acquisitions; corporate valuation; free cash flow; comparable valuation method; benchmarking;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ora:journl:v:1:y:2010:i:2:p:571-577. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catalin ZMOLE (email available below). General contact details of provider: https://edirc.repec.org/data/feoraro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.