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RELATIVE PERFORMANCE OF VALUATION USING MULTIPLES.EMPIRICAL EVIDENCE ON BUCHAREST STOCK EXCHANGE

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Author(s): DRAGOS IOAN MÎNJINA

Journal: Review of Finance and Banking
ISSN 2067-2713

Volume: 01;
Issue: 1;
Start page: 35;
Date: 2009;
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Keywords: multiples | comparables | relative valuation | equity valuation | capital markets

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