Indirect Valuation and Earnings Stability: Within-Company Use of the Earnings Multiple

Michal Kaszas () and Karel Janda ()
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Michal Kaszas: Institute of Strategic Investments, University of Economics Prague
Karel Janda: Institute of Strategic Investments, University of Economics Prague

A chapter in The Impact of Globalization on International Finance and Accounting, 2018, pp 161-172 from Springer

Abstract: 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. Favorable 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.

Keywords: Investment decision; Company valuation; Earnings properties (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-68762-9_18

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DOI: 10.1007/978-3-319-68762-9_18

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