ABSTRACT. This paper investigates the valuation performance of 16 individual value drivers, from five different value driver categories, in relation to the South African equity market for the period 2001–2010. The research results revealed, among other findings, that headline earnings is by far the most accurate value driver and that, contrary to popular belief, earnings before interest, tax, depreciation and amortization and earnings before interest and tax are only fourth and fifth best alternatives. The evidence also suggests that, when employing multiples to perform equity valuations, a careful selection of value drivers could increase valuation accuracy by as much as 50.03%. pp. 92–111
JEL codes: G11; G12; G32; O16

Keywords: equity valuation; JSE; multiples; valuation accuracy; value drivers

How to cite: Nel, W.S., and B.W. Bruwer (2014), “An Emerging Market Perspective on Key Value Drivers in the Valuation of Cross-border Transactions into South Africa,” Economics, Management, and Financial Markets 9(4): 92–111.

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School of Accountancy,
University of Stellenbosch
(corresponding author)
School of Accountancy,
University of Stellenbosch
Department of Statistics
and Actuarial Science,
University of Stellenbosch

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