Рус Eng During last 365 days Approved articles: 2329,   Articles in work: 287 Declined articles: 899 
Library
Articles and journals | Tariffs | Payments | Your profile

Ивко Д.Г. Peculiarities of Assessing Russian Companies' Value By Using the Method of Market Multipliers

Published in journal "Финансы и управление", 2017-1 , pages 34-46.

Resume: The present article is devoted to particularities of using the method of market multipliers in the process of assessing the company value based on the example of gas and oil companies in the Russian Federation. The author analyzes opportunities and reasonability of applying market multipliers to assessing the value of peer companies and describes minuses and pluses of this method. The author has discovered the relationship between volatility of common-stock value and volatility of price multipliers (P/E, P/B), and has analyzed the force and orientation of these relations. Based on the results of the research, the author evaluates the opportunity and reasonability of applying multipliers of peer companies in the process of assessing the value of gas and oil companies in the Russian Federation based on the results of the period since 2006 till 2015. According to the author, it is reasonable to apply the peer company multiplier method to the gas and oil sector of the Russian Federation in order to carry out a fast assessment of a company's value or to prove the value of a company assessed by other methods (cost and profit methods). On the basis of the determination ratio obtained, the author concludes that volatility of common-stock value depends on the volatility of price multipliers of gas and oil companies in the Russian Federation. The author has conducted a financial study using economic comparison and calculation of statistical and econometric values (correlation ratio and determination ratio). The purpose of the research was to study particularities of using the market multiplier method in the process of assessing Russian companies' value based on the example of gas and oil companies of the Russian Federation, in particular, the relationship between volatility of price multipliers value and volatility of common-stock value in the sphere of gas and oil sector of the Russian Federation for the period since 2006 till 2015. P/E and P/B ratios have been chosen as the main price multipliers under review. Recent researches allowed to discover the relationship between price multipliers and volatility of common-stock value on the European market. These conclusions formed the basis for further and more in-depth analysis of the relationship between volatility of price multipliers value and volatility of common-stock value for gas and oil companies of the Russian Federation covered by the present article. The method of multipliers is quite easy- and fast-to-use and therefore can be successfully used to assess a company's value. Many practical assessors apply this method. Quite often they make calculations using multipliers when there is no time or enough information but, as the results of the research show, this can create wrong assessments. The author proves that it is however possible to apply the multipliers method to assessing the value of gas and oil companies of the Russian Federation. The author also proves that it is possible to apply volatility of price multipliers to creating a forecasting model predicting volatility of common-stock value of companies performing in the sphere of gas and oil sector of the Russian market. The author of the article emphasizes the risk of using the above mentioned method due to the fact that this method provides results of high volatility values and absolute and relative indicators for both multipliers and common-stock. The author continues this research in other sectors as well. For example, the author plans to cover up to 10 different sectors of the Russian Federation economy including metallurgy, mechanic engineering, petro-chemistry, power engineering, banking, telecommunication, consumer sector, etc. This will allow to better understand the opportunity to apply the method of multipliers to assessing common-stock value on the Russian Federation market. Even now it is already obvious that the situation has been rather contradictory over the studied period. The author plans to publish the results of researches in other sectors in the nearest future.  

Keywords: method of comparison, multipliers, assessment, volatility, common-stock value, correlation, determination ratio, correlation ratio, peer company, company value

DOI: 10.7256/2409-7802.2017.1.22087

This article is unavailable for unregistered users. Click to login or register

Bibliography:
Лобанова Е.Н., Лимитовский М. А., Минасян В.Б., Паламарчук В.П. Корпоративный финансовый менеджмент. М.: ЮРАЙТ, 2012, 992 с.
Паламарчук В.П. Оценка компании для обоснования стратегических решений. М.: ГОУ ВПО АНХ, 2008, 285 с.
Данилов Е.В., Ибрагимова Х.К., Нестеренко Е.А., Улугова А.Э., Чалов И.А. Современные исследования особенностей применения метода рыночных сравнений на развитых и развивающихся рынках // Корпоративные финансы. — 2013. — №2(26). — С. 102–115.
Рош Дж. Стоимость компании (от желаемого к действительному). Минск : Гревцов Паблишер, 2008, 341 с.
Дамодаран А. Инвестиционная оценка. М. : Альпина Бизнес Букс, 2004, 1342 с.
Чиркова Е. В. Как оценить бизнес по аналогии. М. : Альпина Бизнес Букс, 2009, 194 с.
Теплова Т.В. учебник «Инвестиции», М.:ЮРАЙТ, 2011, раздел 5, с. 513-579.
Черкасова В.А.(2016) Моделирование рыночных мультипликаторов на развивающихся рынках капитала, Управленческий учет и финансы, 02 (2016), с.108-129.
Cheng C., McNаmаrа R. (2000). «The valuation accuracy of the price-earnings and price-book benchmark valuation methods». Review of Quantitative Finance and Accounting, Vol. 15, pp. 349–370.
Moore, D., S., McCabe, G., P., Alwan, L., C., Craig, B., A., Duckworth, W., M. (2011). The Practice of Statistics for Business and Economics. 3rd edition. New York: W. H. Freeman and Company, 787 p.
Liu J., Doron N., Jacob T. (2002). «Equity valuation using multiples». Journal of Accounting Research, Vol. 40, pp. 135–172.
Ibbotson, R. (2011). Why does market volatility matter?, Yale insights, [online], Available via: http://qn.som.yale.edu/content/why-does-market-volatility-matter [Retrieved 2013-02-22]
Seghal S. & Pandey, A. (2009). The Behaviour of Price Multiples in India (1990–2007), Asian Academy of Management Journal of Accounting and Finance, 5 (1), 31-65
Black, R. (1976). Studies in stock price volatility changes. Proceedings of the 1976 Business Meeting of the Business and Economics Statistics Section, American Statistical Association, 177-181
Barnes, R. (2001). Earnings Volatility and Market Valuation: An Empirical Investigation, LBS Accounting Subject Area Working Paper No. ACCT019, p.4
Ou J., A. & Penman, S., H. (1989). Accounting Measurement, Price-Earnings Ratio, and the Information Content of Security Prices, Journal of Accounting Research, 27, 111-144
Fama, E.F. & French, K.R. (1998). Value versus Growth: The International Evidence. Journal of Finance, American Finance Association, 53(6), 1975-1999.
Koutmos, D. (2010). The P/E Multiple and Market Volatility Revisited, International Research Journal of Finance and Economics, 43, 7-16
www.mfd.ru-финансовый портал

Correct link to this article:
just copy this link to clipboard