Abstract
The valuation of equity using multiples of comparables is a highly popular technique that depends critically on two factors: the multiple that is used, and the comparables that are chosen. Recent research investigates which type of multiples produce the greatest valuation accuracy, but there is so far no extensive examination of the accuracy of alternative comparable firm classifications. The examination here finds that Dow Jones and Value Line provide significantly greater accuracy than more popular classifications such as the SIC codes.
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