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A proposal to estimate the valuation of small and medium size companies using geographically comparable information

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Abstract

A common prerequisite in valuation analysis is the availability of temporal information on financial variables. Nevertheless, reduced size companies-representing more than 98% on current productive systems- fail to have available temporal information to estimate valuations. In this paper, we offer a procedure for estimating reduced size companies’ values under the hypothesis that spatial behaviour matters for valuations. With this aim, we present the theoretical background for this hypothesis and introduce a spatial proposal with a case study of industrial companies where the significant role of space on firms’ valuations is previously tested. This analysis shows the relevance of spatial information in firms’ valuation confirming the predictive capability of our approach applying the out of sample methodology

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  • Mate, Mariluz & Occhino, Paolo, 2020. "A proposal to estimate the valuation of small and medium size companies using geographically comparable information," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 4(1), pages 34-51, January.
    • Handle: RePEc:aaz:sbir01:v:4:y:2020:i:1:p:34-51
    DOI: 10.26784/sbir.v4i1.229
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    Cited by:

    1. Sarfraz Hussain & Van Chien Nguyen & Quang Minh Nguyen & Huu Tinh Nguyen & Thu Thuy Nguyen, 2021. "Macroeconomic factors, working capital management, and firm performance—A static and dynamic panel analysis," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-14, December.
    2. Damiano Montani & Daniele Gervasio & Andrea Pulcini, 2020. "Startup Company Valuation: The State of Art and Future Trends," International Business Research, Canadian Center of Science and Education, vol. 13(9), pages 1-31, September.
    3. Giulia Cattafi & Giovanna Mariani & Francesco Pistolesi & Domenico Nicol?, 2023. "Cheating in the evaluation. An expedient to estimate the impact of intangibles on the enterprise value of the high-growth start-ups," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2023(3), pages 193-218.

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    More about this item

    Keywords

    location; company valuation; geographically comparable companies; discounting cash flows model; SMEs;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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