Market-based valuation multiples: Evidence from agribusiness sector

This paper investigates the choice of multiples in valuing the plantation firms in Malaysia from 2003 to 2009. The plantation industry is a homogenous business model that produces commodity products thus rendering excellent empirical settings to reveal the value drivers of such traditional industries. We discovered that commonly adopted methodologies in valuation multiples are associated with pitfalls which may hamper the reliability of the valuations. Our findings also show that price-to-earnings multiple leads to best valuation performance while price-to-sales multiple produces the worst results. Moreover, this research shows that growth prospect is an effective control factor in multiples valuation