Industry Leader Premium

Ja, Kim

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.

Citation

Ja, K. (2019). Industry Leader Premium. European Journal of Multidisciplinary Studies, 4(2), 84-94. https://doi.org/10.26417/ejms-2019.v4i2-542

• Journal Article Type: Article
• Acceptance Date: Jun 29, 2019
• Online Publication Date: Jun 29, 2019
• Publication Date: Aug 30, 2019
• Deposit Date: Apr 30, 2020
• Publicly Available Date: May 1, 2020
• Journal: European Journal of Multidisciplinary Studies
• Electronic ISSN: 2414-8385
• Publisher: European Center for Science Education and Research
• Peer Reviewed: Peer Reviewed
• Volume: 4
• Issue: 2
• Pages: 84-94
• DOI: https://doi.org/10.26417/ejms-2019.v4i2-542
• Public URL: https://nottingham-repository.worktribe.com/output/4365726
• Publisher URL: http://journals.euser.org/index.php/ejms/article/view/4358