IMPROVING THE ACCURACY OF ESTIMATED INTRINSIC VALUE THROUGH INDUSTRY-SPECIFIC VALUATION MODELS

Yanfu Li

Review of Business and Finance Studies, 2021, vol. 12, issue 1, 79-89

Abstract: This study aims to improve the accuracy of estimated intrinsic value by the industry-specific valuation model. Different industries have unique characteristics. As such, they should be valued by different valuation models. This study offers a comprehensive overview of the characteristics of financial and information technology industries and identifies the appropriate industry-specific valuation models for each industry. As the features of firms may still vary greatly even within the same industry, this study further classifies each industry into several sectors according to the Industry Classification Benchmark. After that, a series of corresponding valuation models for each sector are recommended. Detailed explanations for the recommendations are provided for each sector. This study contributes to the literature of valuation methodology by identifying the corresponding valuation models for different sectors/industries. More accurate estimation of intrinsic value can be expected as a result of more compatible valuation model.

Keywords: Industry Characteristic; Industry-Specific Valuation Method (search for similar items in EconPapers)
JEL-codes: C10 G12 G14 (search for similar items in EconPapers)
Date: 2021
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