Proceedings

THE RELEVANCE OF COMPANY EVALUATION
METHODS IN CONDITIONS OF ECONOMIC
INSTABILITY. EMPIRICAL STUDY
ON THE COMPANIES QUOTED IN THE BUCHAREST
STOCK EXCHANGE
Marilena MIRONIUC 1 , Mihai CARP & Bogdan ROBU-IOAN
“Alexandru Ioan Cuza” University of Iasi, Romania
ABSTRACT
In the context of the economic-financial instability that characterizes the current business
environment, knowing the value dimension of companies is an essential requirement for a
correct support of strategic decisions. The objectivity of the value obtained depends on the
relevance of the evaluation methods, determined by the ability to failthfully notice the
influence of all the factors that characterize the economic environment. This study aims at
establishing a hierarchy of the three major evaluation approaches (patrimonial, comparative,
and based on the present value of the flows), according the mentioned criterium. Starting
from a sample of 40 companies quoted in the Bucharest Stock Exchange, we have determined
the ability of each method to provide a faithful and credible value, through the indication of
potential risks. This study has allowed the identification of the profile of the insolvency risk
according to the three suggested evaluation methods, obtaining the classification functions of
the companies into risk groups, as well as the probabilities to determine insolvency. The
results were obtained using the factorial analysis of multiple correspondencies, the
discriminant analysis, and the logistic regression analysis, and the data were processed using
the SPSS 19.0 statistic software.
KEYWORDS: evaluation methods, relevance, insolvency risk, factorial analysis,
discriminant analysis, logistic regression analysis
INTRODUCTION
The evolution of the world’s economy, marked by the globalization of the economic
phenomenon, both at a geographical level and in what concerns the free circulation of
capital, has imposed the need to quantify businesses according to their value, as a
significant benchmark that supports the investment decision of the owners of available
financial resources.
The evolution of the company aims to provide a value dimension of the entity rather
than setting a price at which they can sell. If price is an objective measure, resulted
from the confrontation of the demand with the offer, value is identified as a subjective
notion depending on the influence of a large number of factors that mark the destiny
of a company.
1
Correspondence address: Marilena MIRONIUC, “Alexandru Ioan Cuza” University of Iaşi,
Romania; email: marilena@uaic.ro
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