The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy
Using a sample of 1211 largest US firms in the period 2015 – 2019, I examine the valuation accuracy of different methods of selecting comparable firms using two different frameworks: One approach is based on valuation errors and the other relies on cross-sectional regression analysis. Although there...
| Main Author: | |
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| Format: | Dissertation (University of Nottingham only) |
| Language: | English |
| Published: |
2020
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| Online Access: | https://eprints.nottingham.ac.uk/62127/ |
| _version_ | 1848799936973373440 |
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| author | Le, Hoang Thu Van |
| author_facet | Le, Hoang Thu Van |
| author_sort | Le, Hoang Thu Van |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | Using a sample of 1211 largest US firms in the period 2015 – 2019, I examine the valuation accuracy of different methods of selecting comparable firms using two different frameworks: One approach is based on valuation errors and the other relies on cross-sectional regression analysis. Although there are different methods of choosing peer firms, generally they can be divided into industry membership and industry combined with a firm’s fundamentals. By studying three different multiples, namely price-to-earnings (P/E), price-to-book (P/B) and enterprise-value-to-EBITDA (EV/EBITDA), my study finds that industry membership is the most effective portfolio of peer firms in valuation using P/E and EV/EBITDA. However, P/B multiples obtain the highest accuracy by choosing comparable firms based on both industry and firm’s fundamentals. Therefore, my study adds explanation to the variations of suggested set of comparable firms in previous findings. In addition, I also investigated the effect of adjusting multiples for leverage and forecasted accounting values on valuation performance. |
| first_indexed | 2025-11-14T20:43:36Z |
| format | Dissertation (University of Nottingham only) |
| id | nottingham-62127 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T20:43:36Z |
| publishDate | 2020 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-621272022-12-22T12:56:37Z https://eprints.nottingham.ac.uk/62127/ The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy Le, Hoang Thu Van Using a sample of 1211 largest US firms in the period 2015 – 2019, I examine the valuation accuracy of different methods of selecting comparable firms using two different frameworks: One approach is based on valuation errors and the other relies on cross-sectional regression analysis. Although there are different methods of choosing peer firms, generally they can be divided into industry membership and industry combined with a firm’s fundamentals. By studying three different multiples, namely price-to-earnings (P/E), price-to-book (P/B) and enterprise-value-to-EBITDA (EV/EBITDA), my study finds that industry membership is the most effective portfolio of peer firms in valuation using P/E and EV/EBITDA. However, P/B multiples obtain the highest accuracy by choosing comparable firms based on both industry and firm’s fundamentals. Therefore, my study adds explanation to the variations of suggested set of comparable firms in previous findings. In addition, I also investigated the effect of adjusting multiples for leverage and forecasted accounting values on valuation performance. 2020-12-01 Dissertation (University of Nottingham only) NonPeerReviewed application/pdf en https://eprints.nottingham.ac.uk/62127/2/20150713%20BUSI4020%20UNUK%20Finance%20%26%20Investment%20Dissertation.pdf Le, Hoang Thu Van (2020) The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy. [Dissertation (University of Nottingham only)] |
| spellingShingle | Le, Hoang Thu Van The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy |
| title | The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy |
| title_full | The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy |
| title_fullStr | The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy |
| title_full_unstemmed | The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy |
| title_short | The Effect of Different Multiples and Methods of Selecting Comparable Firms on the Multiple Valuation Accuracy |
| title_sort | effect of different multiples and methods of selecting comparable firms on the multiple valuation accuracy |
| url | https://eprints.nottingham.ac.uk/62127/ |