Author(s): Silva, Rita Albuquerque
Date: 2012
Persistent ID: http://hdl.handle.net/10400.14/9479
Origin: Veritati - Repositório Institucional da Universidade Católica Portuguesa
Subject(s): Intangible assets; High/low intangible-intensive industries; Stock-based models; Flow-based models; Valuation errors; P/E; RIVM; AEGM; Analysts
Recent scandals in companies such as Enron, WorldCom or Tesco have become practical solid examples of accounting manipulation and have been disrupting the accountancy field. As a consequence, there has been a regular reinforcement regarding the practical use of accounting numbers. Equity valuation using accounting numbers plays a vital responsibility in both finance and accounting areas, grounding on the use and comparison of valuation models’ performance. This dissertation aims to explore the association between high and low intangibleintensive industries as well as the performance of accounting-based valuation models. After assessing not only stock- but also flow-based models across the two industries, results reveal a superior performance of the former models for low intangible-intensive industries while flow-based models disclose superior stock price predictions for high intangible-intensive industries. In complement, an analysis of the valuation techniques applied in analysts’ reports demonstrates that marked multiples are usually the preferred methodology for equity research analysts to value companies.
