Industry Leader Premium

  • Ja Ryong Kim PhD, University of Nottingham, UK

Abstract

The advantage of becoming an industry leader is widely studied. However, how can we measure it? This paper measures how much premium an industry leader has in its valuation through a P/E ratio. The findings suggest industry leaders have significantly higher P/E ratios by 0.65 than their peers. The analysis of earnings forecasts suggests this is not due to their high earnings growth potentials but from other sources. However, in stock recommendations, the premium is not recognised by analysts but interpreted as the sign of over-valuation. The paper contributes the new structure of a P/E ratio by identifying the industry leader premium.
Published
Jun 29, 2019
How to Cite
KIM, Ja Ryong. Industry Leader Premium. European Journal of Multidisciplinary Studies, [S.l.], v. 4, n. 2, p. 84 - 94, june 2019. ISSN 2414-8385. Available at: <http://journals.euser.org/index.php/ejms/article/view/4358>. Date accessed: 23 july 2019. doi: http://dx.doi.org/10.26417/ejms.v4i2.p84 - 94.