Fundamental Impact: An Empirical Analysis of the Relationship Between Fundamental Value Drivers and Four Commonly Applied Multiples in the E&P and Telecom Industries

Martin Lien & Trym Strømberg Tollefsen

Student thesis: Master thesis


This thesis conducts an empirical analysis of the relationship between fundamental value drivers and multiples in two industries with different economic characteristics; namely, the telecommunication and oil exploration and production industries. By conducting quarterly linear regressions on 1,324 unique companies, in two different industries, and on four commonly applied valuation multiples on data from 1980 to 2019, the results of over 1,000 linear regressions are thoroughly analyzed and interpreted from a statistical and economic perspective. The empirical analysis revealed that most of the theoretically expected relationships between the fundamental value drivers and multiples examined in the linear regressions were ambiguous. The findings of this thesis suggest that prevailing external factors, incorporation of future prospects, and additional characteristics of contemporary finance may explain the detachment of market valuations from fundamentals.

EducationsMSc in Finance and Investments, (Graduate Programme) Final Thesis
Publication date2019
Number of pages149