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Multiple Valuation and ESG

  • 2023
  • OriginalPaper
  • Chapter
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Abstract

The chapter discusses the reasons for adjusting valuation multiples to account for ESG performance, backed by academic literature and empirical evidence. It introduces two methods for ESG-adjusted valuation: a simple PER-to-ESG ratio and a statistical regression analysis. The statistical method involves testing linearity, multicollinearity, homoscedasticity, and normality assumptions, and evaluating model quality using R-squared and adjusted R-squared measures. The chapter concludes with an example of firm multiple computation using the updated regression model.

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Title
Multiple Valuation and ESG
Author
Dejan Glavas
Copyright Year
2023
DOI
https://doi.org/10.1007/978-3-031-30533-7_6
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