Who's a major? A novel approach to peer group selection: Empirical evidence from oil and gas companies

Frank Asche and Bård Misund

No 2015/18, UiS Working Papers in Economics and Finance from University of Stavanger

Abstract: This study presents a novel approach to selecting comparable companies in equity valuation. While valuation multiples is probably the most common valuation method in practice, discounted cash flow and residual income valuation models are advocated by academics. A key aspect in valuation by multiples is peer group selection. In this paper we examine the usefulness of econometric techniques in peer-group selection for the largest companies in the international oil and gas sector. Using Chow tests we are able to identify firms with similar relationships between valuation multiples and relevant value drivers.

Keywords: Oil and gas companies; valuation; valuation multiples; peer groups (search for similar items in EconPapers)
JEL-codes: G12 Q33 Q35 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2015-12-18
New Economics Papers: this item is included in nep-ene
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Journal Article: Who’s a major? A novel approach to peer group selection: Empirical evidence from oil and gas companies (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:stavef:2015_018

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