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Vliv velikosti podniku na transakční násobitele
[The Impact of the Company's Size on the Transaction Multiple]

Author

Listed:
  • Jana Skálová
  • Tomáš Podškubka
  • Petr Diviš

Abstract

This article focuses on the issue of company's size with connection to its valuation multiples. The phenomenon of company's size effect is described in theory and empirically tested. The knowledge of dependence on transaction multiples on company's size is essential for valuation and decision about acquisition or disinvestment. The article follows on the Jeřábek's and Čihák's article (2008). The aim of the article is to empirically verify the statement that the buyers are willing to pay relatively lower amount of money for smaller companies than in case of investment in larger companies. The aim is not to determine the specific amount of the size risk premiums but demonstrate multiples increase with company's size multiple in connection to company's size. Furthermore, it is necessary to take into account bigger companies have, in comparison with smaller entities, not only higher relative value, but also absolute. In other words, it means higher transaction multiple or lower discount rate.

Suggested Citation

  • Jana Skálová & Tomáš Podškubka & Petr Diviš, 2018. "Vliv velikosti podniku na transakční násobitele [The Impact of the Company's Size on the Transaction Multiple]," Politická ekonomie, Prague University of Economics and Business, vol. 2018(1), pages 57-77.
    • Handle: RePEc:prg:jnlpol:v:2018:y:2018:i:1:id:1181:p:57-77
    DOI: 10.18267/j.polek.1181
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    References listed on IDEAS

    as
    1. van Dijk, Mathijs A., 2011. "Is size dead? A review of the size effect in equity returns," Journal of Banking & Finance, Elsevier, vol. 35(12), pages 3263-3274.
    2. Liu, Weimin, 2006. "A liquidity-augmented capital asset pricing model," Journal of Financial Economics, Elsevier, vol. 82(3), pages 631-671, December.
    3. Wang, Xiaozu, 2000. "Size effect, book-to-market effect, and survival," Journal of Multinational Financial Management, Elsevier, vol. 10(3-4), pages 257-273, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    company size; transaction multiple; impact; statistics; spearman correlation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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