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

Mariluz Mate () and Paolo Occhino ()
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Mariluz Mate: Universidad Politécnica de Cartagena, https://orcid.org/0000-0002-9805-6365
Paolo Occhino: Universidad Politécnica de Cartagena, https://orcid.org/0000-0001-7987-7013

Small Business International Review, 2020, vol. 4, issue 1, 34-51

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

Keywords: location; company valuation; geographically comparable companies; discounting cash flows model; SMEs (search for similar items in EconPapers)
JEL-codes: G12 R12 R51 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:aaz:sbir01:v:4:y:2020:i:1:p:34-51

DOI: 10.26784/sbir.v4i1.229

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