Application Research of Comparable Firm-Finding Algorithm(CFFA) in Information Technology Industry

Abstract

This paper uses the financial and accounting data to evaluate all listed companies in the information technology industry in China in 2021 by using the Comparable Firm-Finding Algorithm method. The information technology industry is characterized by light assets and high growth. Comparable Firm-Finding Algorithm (CFFA), which is based on regression analysis, includes the Comparable Company Analysis (CCA) as a special case. The CFFA method calculates a weighted average across peer companies by obtaining data on resources and capabilities. The result is more reliable than simply obtaining the average or median in CCA. This research provides practical evidence for the application of CFFA in the valuation of information technology industry.