My dissertation will focus on the financial reports of four different companies: BASF, DOW, SABIC, and Dupont. This will be aided by an economy and industry analysis as well as a ratio analysis for the each of the four firms. Valuation models will then be applied in order to arrive to price of the shares for each of the four firms. This literature review will help to find out the most appropriate valuation models to apply in order to arrive at a reasonable recommendation for investors who are interested in these four companies.
A number of studies have focused on the usage of financial valuation models in the U.K. in order to evaluate a company’s equity. For example, Imam et al. (2008) aimed to find out the models that were used by financial analysts. They used a methodology that introduced the evidence by using two different ways—interviews with financial analysts and looking into the content of equity reports. Their study highlighted three major points: which valuation models are used by analysts, why are these models used, and how are these models used. In the same area, Demirakos et al. (2004) sought to explain financial analyst practices in terms of valuation by examining hypotheses related to the use of single period and multi-period forms, and also to test the usage of both the accrual and cash flow-based methods. ...Show more