Do U.S. Firms Trade at a Valuation Premium? A Comparison with European Firms

Sammanfattning

This paper examines whether U.S. firms exhibit a valuation premium relative to developed market European firms. This issue is important for understanding cross-countrydifferences in capital allocation and the cost of capital. Using panel data on 701 firmsfrom 2000 to 2025, we estimate a random effects model with Tobin’s Q as the dependentvariable. The main contribution is a firm-level U.S.-Europe comparison that combinesselected firm characteristics and industry effects. The results show that a statisticallysignificant U.S. valuation premium persists after controlling for the factors included inthe model.