Assessment of firm's market value through financial variables - A case of UK Banking industry

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ACKNOWLEDGEMENT

No words can express my appreciation and gratitude to my research advisor _______ through the course of this research, Professor _____has taught me numerous values that extend well beyond the realm of _________ (Your Subject Name). His emphasis on dedication to work and his valuable and practical insights of life are some of the major highlights of my education at The University _________.

DECLARATION

I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for the academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

CHAPTER 1: INTRODUCTION1

1.1 Introduction1

1.2 Problem statement2

1.3 Purpose statement2

1.4 Aims and objectives of the study2

1.5 Research questions2

1.6 Variables to be used3

1.7 Hypothesis3

1.8 Rationale of the study4

1.9 An overview of the UK banking industry4

CHAPTER 2: LITERATURE REVIEW6

2.1 Financial variables6

2.2 The theory of market valuation in the new economy8

2.3 Firm's intrinsic value is driving its market value9

2.4 Assessing market value of a firm through different financial variables10

2.4.1 Price-earnings ratio11

2.4.2 Discounted cash flow model11

CHAPTER 3: METHODOLOGY12

3.1 Research approach used in this study12

3.1.1 Justification of using mixed method to research12

3.2 Research tools to be utilized13

3.2.1 Valuation models13

3.2.2 Regression analysis13

3.2.3 Secondary data search13

3.2.4 Unstructured interview questions13

3.3 Population and sampling14

3.3.1 Population14

3.3.2 Sampling frame15

3.3.3 Sampling procedure15

3.3.4 Sample15

REFERENCES16

APPENDIX20

Appendix A: Interview questions20

CHAPTER 1: INTRODUCTION

1.1 Introduction

Beaver (2007, 71) has described that the link: between firm strategy and firm performance has always been an important issue in the field of strategic marketing. The primary challenge of management involves creating a firm strategy that creates and supports competitive advantages to ensure above-average performance over time. As markets increase in the level of competition such advantages are more difficult to create and interest has grown in the strategic management of intangible and non-financial attributes such as customer satisfaction to create new sources of strategic advantages. This dissertation explores the role of non-financial marketing elements in the firm's strategic structure and how one of these elements, customer satisfaction can be related to subsequent firm performance, As such, it contributes to the literatures of strategic marketing, strategy, and empirical predictions of firm success. This research will focus on the whether one can use financial variables to assess the market value of a firm, with taking the case of banking sector in UK.

Valuating and linking firms' market values to financial variables has long been the task of both investors and corporate managers. Since, a number of studies have estimated that firms' book values only explain 10 to 15 percent of their true market value, there has been growing concern over what financial variables influence market value (i.e., traditional, non-traditional, and intrinsic variables), as traditional financial variables (those recognized by GAAP), like RI and NI, were used very early to describe firms' wealth creation (Begley, Ming, and Watts 2006, 267).



1.2 Problem statement

Beneish (2005, 58) have alleged that ...