THE ANALYSIS OF THE RELATION COUNTRY RISK – MULTIPLE VALUE

Abstract

Financial theory state that high expected growth, low risk in the company’s sector and low interest rates will push multiples higher. In this respect the goal of the empirical work is to examine country risk-multiple value relation, for the companies from emerging and frontier markets such as Central and East European ones. Specific control variables have been included in the model as proxy for growth opportunities, profitability, capital structure, and asset utilization. Using panel data analysis for period 2010-2015 as well as other financial variables for a sample of Central and East European countries during 2010-2015. The results partially support financial theories, mainly the significance of country risk and debt ratio and reject the growth opportunities hypothesis.

Keywords

• multiple value, country risk, growth, profitability, capital structure, asset utilization