SELECTING THE GROUP OF COMPARABLE FIRMS FOR VALUATION BY MULTIPLES ON BUCHAREST STOCK EXCHANGE

This paper examines the valuation accuracy of the price-earnings (PIE), the price-book value (P/B) and the price-total assets (P/TA) valuation methods. It is used a sample of companies traded at the Bucharest Stock Exchange in the period 2003 - 2008. This paper selects comparable firms, on which the performance of valuation methods relies, based on industry membership (IND), total assets (TA) and return on equity (ROE), both individually and in pairs. It is found that ROE-included selection methods assure the best accuracy for every multiple analysed. It was also found that PIE valuation method performs the best comparative with the other two valuation methods while the P/TA multiples has the lowest valuation performances.