Estimating industry multiples
By: Malcolm Baker, Richard S. Ruback
Contributors: Ruback, Richard S., 1954-; Harvard Business School
Published: 1999
Language: eng
Number of pages: 30
Subjects: Corporations; Valuation; Econometrics; Sampling (Statistics)
Description: We analyze industry multiples for the S&P 500 in 1995. We use Gibbs sampling to estimate simultaneously the error specification and small sample minimum variance multiples for 22 industries. In addition, we consider the performance of four common multiples : the simple mean, the harmonic mean, the value-weighted mean, and the median. The harmonic mean is a close approximation to the Gibbs minimum variance estimates. Finally, we show that EBITDA is a better single basis of substitutability than EBIT or revenue in the industries that we examine.
Notes: "First draft: May 1999. Rev. June 11, 1999"--Added title page.

"This study has been supported by the Division of Research of the Harvard Graduate School of Business Administration"--Added title page.

Includes bibliographical references.