ISBN: 3790817228
TITLE: The Market Approach
AUTHOR: Meitner
TOC: 

1 Introduction 1
1.1 Motivation 1
1.2 Research Aims 3
1.3 Reading Guide 4
2 Foundations of Comparable Company Valuation 7
2.1 Definitions and Scope 7
2.2 Comparable Company Valuation Within the Business Valuation Framework 9
2.2.1 Value Theories 9
2.2.2 Value Versus Price 13
2.2.3 Approaches to Company Valuation 18
2.2.4 Purposes of Appraisal 25
2.2.5 Classification of Comparable Company Valuation 27
2.3 Rationale and Style of Comparable Company Valuation 30
2.3.1 Immediate Valuation Models 30
2.3.2 Single-Factor Valuation Models 32
2.3.3 Multi-Factor Valuation Models 34
2.4 Special Tasks in Comparable Company Valuation 35
2.4.1 Quality of Accounting Variables 35
2.4.2 Aggregating the Peer Group Results 38
2.4.3 Premiums and Discounts 42
3 Interrelation of Comparable Company Selection and Valuation Model Choice 47
3.1 Determinants of Comparable Company Selection 49
3.1.1 Degree of Similarity of the Peer Group Companies 49
3.1.2 Degree of Market Efficiency and Pricing Quality 55
3.1.3 Consequences for Comparable Company Valuation with Special Regard to the Peer Group Selection 68
3.1.4 Implications for the Choice of the Valuation Model 71
3.2 Determinants of Valuation Model Choice 73
3.2.1 Value Relevance of the Reference Variables 73
3.2.2 Future Similarity Between the Target Company and Comparable Companies 91
3.2.3 Technical Limitations of Valuation Models 93
3.2.4 Consequences for Comparable Company Valuation with Special Regard to the Choice of the Valuation Model 96
3.2.5 Implications for the Selection of Comparable Companies 98
3.3 Comparable Company Valuation as an Integrated Process 100
4 Processing Comparable Company Valuation 103
4.1 Immediate Comparable Company Valuation 103
4.1.1 Valuation Process 103
4.1.2 Problems Associated with Immediate Comparable Company Valuation Models 104
4.2 Single-Factor Comparable Company Valuation 105
4.2.1 Valuation Process 105
4.2.2 Problems Associated with Single-Factor Comparable Company Valuation Models 108
4.3 Multi-Factor Comparable Company Valuation 120
4.3.1 Existing Models 120
4.3.2 Derivation of a Two-Factor Model Based an Book Value and Earnings 125
5 Empirical Study 139
5.1 Data 139
5.1.1 Sample Selection 139
5.1.2 Variables 141
5.2 Value Relevance 142
5.2.1 Previous Empirical Results 142
5.2.2 Variable Definition 144
5.2.3 Hypotheses and Econometric Methodology 146
5.2.4 Results 163
5.3 Pricing Accuracy 188
5.3.1 Previous Empirical Results 188
5.3.2 Variable Definition and Methodology 190
5.3.3 Results 193
6 Concluding Remarks 197
6.1 Implications for Business Valuation 198
6.2 Implications for Future Research 202
7 Appendix 205
7.1 Detailed Derivation of the Two-Factor Comparable Company Valuation Model 205
7.2 Proof of the Convergence of R2 206
7.3 Industries Included in the Empirical Study 208
7.4 Descriptive Statistics 209
7.4.1 Descriptive Statistics by Creditworthiness 209
7.4.2 Descriptive Statistics by Industry Structure 210
7.4.3 Descriptive Statistics by Asset Heaviness 211
7.5 Annual R^2 for Single-Factor Models 212
7.6 Adjusting Creditworthiness for the Impact of Earnings 215
List of Figures 219
List of Tables 221
References 223
END
