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Indirect Firm Valuation and Earnings Stability

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  • Janda, Karel
  • Kaszas, Micha

Abstract

This paper investigates statistical significance of earnings stability in the within-company indirect valuation method. We empirically establish superiority of a within-company earnings multiple valuation technique for the relatively most stable companies. Favourable empirical results are robust against different means of operationalization of the stability construct and valuation multiples. Results of this paper indicate that the indirect within-company price-to-earnings valuation yields the most precise and the most accurate value estimates.

Suggested Citation

  • Janda, Karel & Kaszas, Micha, 2017. "Indirect Firm Valuation and Earnings Stability," MPRA Paper 77234, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:77234
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    References listed on IDEAS

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    Cited by:

    1. Karel Janda, 2019. "Earnings Stability and Peer Company Selection for Multiple Based Indirect Valuation," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 69(1), pages 37-75, February.

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    More about this item

    Keywords

    Investment Decision; Company Valuation; Earnings Properties;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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