Multiples and Their Valuation Accuracy in European Equity Markets

Schreiner, Andreas; Spremann, Klaus

doi:10.2139/ssrn.957352

Cited by 35 publications

(37 citation statements)

References 18 publications

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“…In their analysis of multiples' accuracy in European equity markets, Schreiner and Spremann (2008) consider a list of 27 equity multiples, 10 of which are forward looking. Among the 17 current multiples considered, the best-performing one, a knowledge-related multiple, 21 has a mean (median) error of 44.45% (25.37%).…”

Section: Comparison With Results Obtained By Authors Using the Same Dmentioning

confidence: 99%

Market Multiples and the Valuation of Cyclical Companies

Bagna¹,

Ramusino²

2017

IBR

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Market multiples are more often used than studied. Equity analysts, investment bankers and other practitioners widely use market multiples to estimate the value of companies. Nevertheless, literature about multiples is not as rich as the wide use of these valuation tools would suggest. This paper, focusing on European listed companies, investigates how multiples can be used in the valuation of cyclical companies, a much less investigated research topic. We test the accuracy of multiples to understand whether their performance in valuing cyclical companies is better, worse or equal to the performance found in prior studies, where both cyclical and non cyclical companies are analyzed without distinguishing between them. We also attempt to verify whether the way in which multiples are calculated significantly affects the accuracy of estimation. Our aim is to develop a valuation approach consistent with valuation theory and helpful in everyday practice.

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Section: Comparison With Results Obtained By Authors Using the Same Dmentioning

confidence: 99%

Market Multiples and the Valuation of Cyclical Companies

Bagna¹,

Ramusino²

2017

IBR

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“…The reason offered by the literature for the superior valuation performance of equity-based multiples is that noise, which is caused when the book value of debt is used as a proxy for the market value of debt, in the estimation of the entity value distorts the accuracy of entity-based multiples (Schreiner & Spremann, 2007;. The empirical evidence in this study suggests that the noise is considerable, especially if one considers that valuation theory and the design of this study were biased in favour of entity-based multiples.…”

Section: Figure 5…continuedmentioning

confidence: 99%

“…Apart from the contribution by Schreiner and Spremann (2007), the international literature on developed markets offers no support for the superiority of equity-based multiples over entity-based multiples, or vice versa. The emerging market literature is silent in this regard.…”

Section: Introduction and Theorymentioning

confidence: 99%

“…capital structure has no affect on WACC or equity and entity value. However, if the Modigliani and Miller theory holds, different capital structures between entities could erroneously affect equitybased multiples (Schreiner & Spremann, 2007). Executives may also be tempted to substitute debt with equity in order to orchestrate higher equity-based multiples (Chadda, McNish & Rehm, 2004).…”

Section: Introduction and Theorymentioning

confidence: 99%

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Equity- And Entity-Based Multiples In Emerging Markets: Evidence From The JSE Securities Exchange

Nel

Bruwer

Roux

2013

JABR

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“…According to the European data, Schreiner & Spremann (2007) examined the accuracy of various multiples. They argue that the equity valuation multiples (P/E, P/BV) outweigh in accuracy the enterprise value multiples (EV) -the EV/EBITDA and EV/EBIT multiples.…”

Section: Introductionmentioning

confidence: 99%

Multiples for Valuation Estimates of Companies in the Technology Sector of Emerging Markets

Salmanov¹,

Babina²,

Bashirova³

et al. 2015

ASS

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Market multiples are a tool for estimation corporate value. These tools are expressed as temporal dynamics and differences in the markets, sectors, industries, firms. Despite their great practical application, a number of problems remains which continue to be debated. This article examines the explanatory power of multiples, and makes a comparison of multiples for the technology sector with the market as a whole, and multiples for the technology sector of Emerging Markets are established within the ranking, most fully explaining the value of stocks using an approach that ensures mitigating the differences in multiples from basic variables.

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Multiples and Their Valuation Accuracy in European Equity Markets

Cited by 35 publications

References 18 publications

Market Multiples and the Valuation of Cyclical Companies

Market Multiples and the Valuation of Cyclical Companies

Equity- And Entity-Based Multiples In Emerging Markets: Evidence From The JSE Securities Exchange

Multiples for Valuation Estimates of Companies in the Technology Sector of Emerging Markets

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