Journal of Financial Economics Vol. 53 No. 3 1999
Valuing IPOs
Abstract
The use of accounting information in conjunction with comparable firm multiples is widely recommended for valuing initial public offerings (IPOs). We find that the price–earnings (P/E), market-to-book, and price-to-sales multiples of comparable firms have only modest predictive ability without further adjustments. This is largely due to the wide variation of these ratios for young firms within an industry. P/E multiples using forecasted earnings result in much more accurate valuations than multiples using trailing earnings.
- DOI
- 10.1016/s0304-405x(99)00027-6
- Volume
- 53
- Issue
- 3
- Pages
- 409-437
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref