ISSN: 1998 - 4162

JISR MSSE Journal Contents

Volume 9, Number 1, January 2011


Multiple Differences: Selecting Appropriate Value Driver for Multiple based Valuation in FTSEALL index
Nauman J. Amin - IBA, Karachi, Pakistan

Abstract
Multiple based valuation is a valuation technique whose use is much frequent in many situations when it comes to equity valuation. According to Damodaran (2006) though Multiple based valuation method of valuing stocks has got very little theoretical evidence, but still it is the most popular in industry. It has even been likened to "an art form" (Bhojraj, 2002). Reason of its widespread use could be attributed to its ease of use, but does this method provide a good valuation tool and if yes, what sort of value drivers are most useful in predicting equity value? To answer this question, FTSEALL index was considered as it represents more than 98% of the UK market in terms of capitalization.

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