A Multifactor Stock Valuation Model: An Empirical Application to the Thai Telecommunications Sector
Many different emerging and enduring financial issues are present in the financial sectors of developing countries (Islam and Watanapalachaikul, 2004). However, one important issue is valuation, which is the process of converting financial forecast into an estimate of the value of the stock or firm. In practice, a wide variety of valuation methods and models are employed. Among the available methods are the discounted cash flows model (DCFM), the capital asset pricing model (CAPM), and the arbitrage pricing model (APM). Limitations of the existing models are based on the concept of market equilibrium and the existence of a perfect market. In many developing countries, market imperfections and other market characteristics exist for which the existing models may not be suitable. Therefore, a suitable approach to the valuation of stocks in developing countries needs to be developed.