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Relative Performance of Valuation Using Multiples. Empirical Evidence on Bucharest Stock Exchange

  • Dragos Ioan Mînjina

    (Academia de Studii Economice / Facultatea de Finante, Asigurari, Banci si Burse de Valori)

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    This paper examines the valuation performances of seven multiples on a sample of BSE-listed firms. When industry membership is used as the selection method for comparable firms, the P/CF multiple leads to the best valuation performance. P/E, P/B, P/CF and P/TA multiples assure the highest accuracies when ROE is used as the selection method for comparable firms. In the case of both selection methods of comparables, the P/S multiple leads to the least accurate valuation. In this study, accuracy levels of multiple valuations are generally lower than those obtained using the same methods on more developed capital markets.

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    Article provided by Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante in its journal The Review of Finance and Banking.

    Volume (Year): 01 (2009)
    Issue (Month): 1 (December)
    Pages: 035-053

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    Handle: RePEc:rfb:journl:v:01:y:2009:i:1:p:035-053
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    1. Dragota, Victor & Mitrica, Eugen, 2004. "Emergent capital markets' efficiency: The case of Romania," European Journal of Operational Research, Elsevier, vol. 155(2), pages 353-360, June.
    2. Volker Herrmann & Frank Richter, 2003. "Pricing With Performance-Controlled Multiples," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 55(3), pages 194–219, July.
    3. 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 349-70, December.
    4. DELOOF, Marc & DE MAESENEIRE, Wouter & INGHELBRECHT, Koen, 2002. "The valuation of IPOs by investment banks and the stock market: Empirical evidence," Working Papers 2002004, University of Antwerp, Faculty of Applied Economics.
    5. 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.
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