The study suggest that multiples based on forward earnings are the major determinant of performance of stock prices. (2002) examine the valuation properties of a comprehensive list of value drivers. Tasker (1998) examines the industry patterns in the selection of comparable firms by investment bankers and analysts in acquisition transactions and suggests systematic selection of industry-specific multiples in different industries. The study suggest that forward P/E multiples based on forecasted earnings is the most dominating multiple with respect to valuation accuracy.
Harmonic mean drivers#
Kim and Ritter (1999) investigate how IPO pricing are determined using multiples, which include value drivers of book value, cash flows, sales, past earnings, and forecasted earnings. The study also suggests that industry-adjusted EBITDA performs better than EBIT and sales. The study suggests that absolute variation errors are proportional to value and also demonstrates that industry multiples that are estimated using harmonic mean are close to minimum variance estimates based on Monte Carlo simulations.
Baker and Ruback (1999) examine the econometric problems with different ways of computing industry multiples and comparing the relative performance of multiples based on EBITDA, EBIT, and sales. The results of this study suggest that the best performance is achieved by using weights derived from harmonic mean book and earnings multiples and coefficients from price-scaled regressions on earnings and book value. (1999) examine the different linear combinations of value drivers, which are derived from earnings, book value of assets, and dividends. Their results suggest that valuation errors are smaller when comparable firms are chosen based on similar historical growth earnings. Boatsman and Baskin (1981) compare the valuation accuracy of P/E multiples based on two sets of comparable firms in the same industry.
Researchers have basically focused on earnings and cash flow-based value drivers. In a study by Goldman Sachs (1999), the P/E ratio was found to be the primary valuation metric for approximately 50% of US investment analysts. Rajesh Kumar, in Valuation, 2016 7.7 Research studies on relative valuation Nonetheless, marriage squeezes have had less influence on the probability of ever marrying, and are unlikely to have played a major role in large-scale social change. Using the harmonic mean approach, analyses indicate that over the past 50 years marriage squeezes have had significant impacts on the timing of marriage. The marriage squeeze is the best known manifestation of two-sex population dynamics. Although other serious alternatives have been proposed, the harmonic mean approach is based on the most plausible demographic foundation. The leading two-sex solution that has been advanced is the harmonic mean approach, which assumes that the sum of male and female marriage or birth rates is independent of such compositional effects.
�2T I�Hs=sKKK��\��t.}Ǣ�� \#��4.Robert Schoen, in International Encyclopedia of the Social & Behavioral Sciences (Second Edition), 2015 Abstractĭemographic models of marriage and fertility that incorporate the behavior of both males and females encounter the so-called ‘two-sex problem.’ That problem arises because observed one-sex male and female rates of marriage and birth are influenced by the total age–sex composition. Click here to return to USGS publ\ications)/Contents(Click here to return to USGS publications)/Type/Annot/Subj(Text Box)/Rect/BS 1336 0 R/CreationDate(D:20040104214035-06'00')/NM(-Duo85dd9ZvZCFHshn0xpD)/Subtype/FreeText/M(D:20040104214054-06'00')/P 1311 0 R/T(Nick)/AP/DA(0 G 0 0 0 rg 0 Tc 0 Tw 100 Tz 0 TL 0 Ts 0 Tr /Arial 12 Tf)/DS(font: Arial,sans-serif 12.0pt text-align:left color:#000000 )>endobj1315 0 obj/ProcSet>/Subtype/Form/FormType 1/Matrix>stream
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