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  • On the importance of asset pricing factors in the relative valuation
    Skočir, Matevž ; Lončarski, Igor
    In this study, we examine the implications of multi-factor asset pricing models in corporate valuation, focusing on the relative valuation approach. Our investigation centers around an eight-factor ... model, which we compare against traditional valuation methods that rely on industry or risk grouping and cross-sectional averages. The purpose of this comparison is to assess the efficacy of incorporating pricing factor variables into the valuation process and to understand their impact on valuation accuracy. The findings of our analysis suggest that the use of the eight-factor model leads to a reduction in estimation errors of valuation multiples, indicating an important improvement in precision compared to conventional valuation methods. Additionally, our research offers insights into the practicality of applying multi-factor models. It contributes to the intersection between empirical asset pricing and corporate finance by providing a detailed evaluation of advanced valuation models and their relevance in improving the accuracy of relative valuation.
    Source: Research in international business and finance. - ISSN 0275-5319 (Vol. 70, part B, article no. 102366, Jun. 2024, 18 str.)
    Type of material - article, component part
    Publish date - 2024
    Language - english
    COBISS.SI-ID - 194092547

    Link(s):

    Repository of the University of Ljubljana – RUL
    DOI

source: Research in international business and finance. - ISSN 0275-5319 (Vol. 70, part B, article no. 102366, Jun. 2024, 18 str.)
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