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The Effect of the Profitability on the Valuation Models: Evidence from Italian Acquisitions

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  • Marco Angelo Marinoni
  • Anna Maria Fellegara

Abstract

The aim of this study is to analyse the behaviour of the book-to-market index, B/MV, on a sample of Italian listed companies that completed a M&A operation in the span 2008-2016, the decade of the economic-financial crisis. Moreover the authors' interest in investigating the relationship between the market index and the income and non-earnings performance index. The study has verified whether the listed Italian companies sampled have book-to-market indices in line with corporate performance in terms of profitability, and therefore of general economic, patrimonial and financial equilibrium. The intention is to consider if the market manages to "capitalise" corporate trends regularly and with what intensity. The hypothesis concerns the possibility that the B/MV may be more affected by financial market externalities than by the specific economic and financial outlook in terms of market capitalisation. The profound geopolitical and macroeconomic changes of the last few decades and the consequent multiple corporate crises, have undoubtedly called into question the validity and reliability of certain valuation assumptions.

Suggested Citation

  • Marco Angelo Marinoni & Anna Maria Fellegara, 2019. "The Effect of the Profitability on the Valuation Models: Evidence from Italian Acquisitions," International Business Research, Canadian Center of Science and Education, vol. 12(5), pages 95-110, May.
    • Handle: RePEc:ibn:ibrjnl:v:12:y:2019:i:5:p:95-110
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    More about this item

    Keywords

    book-to-market; firm robustness; profitability; IVS; M&A;
    All these keywords.

    JEL classification:

    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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