"Influencing Factors Of Valuation Multiples Of Companies "

Abstract

The main objective of this study is to determine the factors that influence the valuationmultiples used in the market approach in valuing companies. The analysis takes into account bothfactors related to the company and the country or stock market on which the company stocks aretraded.The database for this research was represented by a total of 1,853 companies listed on variousstock markets and the source of information was represented by Infinancials database. They wereselected based on criteria related to the availability of information and business sectors to whichthey belong. Such data base includes 15 specific industry sectors, each sector is divided into twodata sets according to the level of development of the countries of origin of the companies. Thus the1,853 companies in the database were divided into companies from developed countries andcompanies from developing countries.The independent variables considered in this analysis are: company size (quantified by sales), theinflation rate in the country of origin of the company, country risk for the company's home countryand three financial ratios considered representative by the investors in the capital market namely:EBITDA ratio, equity/assets ratio and liquidity quick ratio.