The Market Approach to Comparable Company Valuation

Online-Ressource (XI, 241 p. 34 illus, digital)

ZEW Economic Studies ; 35

Includes bibliographical references

Introduction; Foundations of Comparable Company Valuation; Interrelation of Comparable Company Selection and Valuation Model Choice; Processing Comparable Company Valuation; Empirical Study; Concluding Remarks; Appendix

CoverTable of Contents -- 1 Introduction -- 1.1 Motivation -- 1.2 Research Aims -- 1.3 Reading Guide -- 2 Foundations of Comparable Company Valuation -- 2.1 Definitions and Scope -- 2.2 Comparable Company Valuation Within the Business Valuation Framework -- 2.2.1 Value Theories -- 2.2.2 Value Versus Price -- 2.2.3 Approaches to Company Valuation -- 2.2.4 Purposes of Appraisal -- 2.2.5 Classification of Comparable Company Valuation -- 2.3 Rationale and Style of Comparable Company Valuation -- 2.3.1 Immediate Valuation Models -- 2.3.2 Single-Factor Valuation Models -- 2.3.3 Multi-Factor Valuation Models -- 2.4 Special Tasks in Comparable Company Valuation -- 2.4.1 Quality of Accounting Variables -- 2.4.2 Aggregating the Peer Group Results -- 2.4.3 Premiums and Discounts -- 3 Interrelation of Comparable Company Selection and Valuation Model Choice -- 3.1 Determinants of Comparable Company Selection -- 3.1.1 Degree of Similarity of the Peer Group Companies -- 3.1.2 Degree of Market Efficiency and Pricing Quality -- 3.1.3 Consequences for Comparable Company Valuation with Special Regard to the Peer Group Selection -- 3.1.4 Implications for the Choice of the Valuation Model -- 3.2 Determinants of Valuation Model Choice -- 3.2.1 Value Relevance of the Reference Variables -- 3.2.2 Future Similarity Between the Target Company and Comparable Companies -- 3.2.3 Technical Limitations of Valuation Models -- 3.2.4 Consequences for Comparable Company Valuation with Special Regard to the Choice of the Valuation Model -- 3.2.5 Implications for the Selection of Comparable Companies -- 3.3 Comparable Company Valuation as an Integrated Process -- 4 Processing Comparable Company Valuation -- 4.1 Immediate Comparable Company Valuation -- 4.1.1 Valuation Process -- 4.1.2 Problems Associated with Immediate Comparable Company Valuation Models -- 4.2 Single-Factor Comparable Company Valuation -- 4.2.1 Valuation Process -- 4.2.2 Problems Associated with Single-Factor Comparable Company Valuation Models -- 4.3 Multi-Factor Comparable Company Valuation -- 4.3.1 Existing Models -- 4.3.2 Derivation of a Two-Factor Model Based on Book Value and Earnings -- 5 Empirical Study -- 5.1 Data -- 5.1.1 Sample Selection -- 5.1.2 Variables -- 5.2 Value Relevance -- 5.2.1 Previous Empirical Results -- 5.2.2 Variable Definition -- 5.2.3 Hypotheses and Econometric Methodology -- 5.2.4 Results -- 5.3 Pricing Accuracy -- 5.3.1 Previous Empirical Results -- 5.3.2 Variable Definition and Methodology -- 5.3.3 Results -- 6 Concluding Remarks -- 6.1 Implications for Business Valuation -- 6.2 Implications for Future Research -- 7 Appendix -- 7.1 Detailed Derivation of the Two-Factor Comparable Company Valuation Model -- 7.2 Proof of the Convergence of R[sup(2)] -- 7.3 Industries Included in the Empirical Study -- tidtid6.

10.1007/3-7908-1723-6 [DOI]

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