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Tesi etd-05032019-210006


Thesis type
Tesi di laurea magistrale
Author
ANDRIUOLO, GIULIA
URN
etd-05032019-210006
Title
Ambiguities and contradictions in the Size Effect - Adjustments for multiples applied to SMEs
Struttura
ECONOMIA E MANAGEMENT
Corso di studi
STRATEGIA, MANAGEMENT E CONTROLLO
Commissione
relatore Prof. Gonnella, Enrico
Parole chiave
  • Size Effect
  • Size Premium
  • Market Multiples
  • Stock Returns
Data inizio appello
08/07/2019;
Consultabilità
secretata d'ufficio
Data di rilascio
08/07/2022
Riassunto analitico
The detection of a size effect (1981), the phenomenon according to which the small cap stocks' returns outperform those of larger stocks, has generated over time complex and contradictory theories, because its first explanation lacked a theoretical model of equilibrium as a basis.
As a consequence, my study tries to better explain the very concept of size effect, it aims at confirming its existence and is meant to fill a void in its literature, which lacks a satisfactory empirical demonstration of the manifestation of the size effect in market multiples.
In order to fulfil these objectives I am going to verify Cornell and Gokhale's study, which has found a reversal in the size effect with regard to the price-to-earnings ratio, adopting a new dimensional criterion and the EV/EBITDA in place of the P/E ratio.
Finally, this operation is fundamental, because if the size effect exists and it is not incorporated in such approach, the combined use of both the Discounted Cash Flow (DCF) and the multiples approaches may generate some inconsistencies, as the former usually expresses the size effect through the application of an additional amount, the so called "size premium", while the latter does not.
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