Valuation Discrepancy of Coffee Chains in the US and China: A Capital Market Perspective

Research Article
Open access

Valuation Discrepancy of Coffee Chains in the US and China: A Capital Market Perspective

Wanqing Zhang 1*
  • 1 Rotman Commerce, University of Toronto, Toronto, Canada    
  • *corresponding author wanqingzzz.zhang@mail.utoronto.ca
AEMPS Vol.186
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-153-2
ISBN (Online): 978-1-80590-154-9

Abstract

This paper investigates the valuation discrepancy between major coffee chains in the United States and China, focusing on Starbucks and Luckin Coffee. Although both firms demonstrate strong revenue growth, comparable business models, and digital innovation, their valuation multiples differ markedly in global capital markets. Starbucks commands significantly higher P/E and EV/EBITDA multiples compared to Luckin. This study applies a trading comparables framework to estimate Luckin’s implied value and explore the gap relative to market valuation. Furthermore, the research integrates structural variables including investor composition, regulatory transparency, listing venue, and ESG performance to explain the valuation divergence. Results suggest that such institutional and market factors—not just firm-specific fundamentals—play a pivotal role in determining cross-border valuation outcomes. In doing so, the study highlights the limitations of traditional valuation models when applied across regulatory environments and offers recommendations for refining comparative analysis in global investment contexts. The findings contribute practical insights for investment banking professionals involved in IPO pricing, equity research, and international M&A advisory, particularly in the context of emerging-market issuers.

Keywords:

valuation multiples, capital markets, Starbucks, Luckin Coffee, cross-border IPO

Zhang,W. (2025). Valuation Discrepancy of Coffee Chains in the US and China: A Capital Market Perspective . Advances in Economics, Management and Political Sciences,186,56-60.
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References

[1]. The Tale of 2023 in 10 charts. (2023, December 17). Goldman Sachs Global Investment Research. Retrieved from https://www.gspublishing.com/content/research/en/reports/2023/12/17/7e30caa9-30d8-40b7-90c1-6ddd758de9d1.html

[2]. La Porta, R., De‐Silanes, F. L., & Shleifer, A. (2006). What works in securities laws? The Journal of Finance, 61(1), 1–32.

[3]. Liu, J., Nissim, D., & Thomas, J. (2002). Equity valuation using multiples. Journal of Accounting Research, 40(1), 135–172.

[4]. Lie, E., & Lie, H. J. (2002). Multiples used to estimate corporate value. Financial Analysts Journal, March/April, 44–54.

[5]. Henschke, S., & Homburg, C. (2009). Equity valuation using multiples: Controlling for differences between firms. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1270812

[6]. Bhojraj, S., & Lee, C. M. C. (2002). Who is my peer? A valuation-based approach to the selection of comparable firms. Journal of Accounting Research, 40(2), 407–439.

[7]. Laeven, L., & Levine, R. (2009). Bank governance, regulation and risk taking. Journal of Financial Economics, 93(2), 259–275.

[8]. Doidge, C., Karolyi, G. A., & Stulz, R. M. (2004). Why are foreign firms listed in the U.S. worth more? Journal of Financial Economics, 71(2), 205–238.

[9]. Bushman, R. M., Piotroski, J. D., & Smith, A. J. (2004). What determines corporate transparency? Journal of Accounting Research, 42(2), 207–252.

[10]. Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance, 52(2), 737–783.

[11]. Cao, J., Duanmu, J. L., & Rodríguez, D. (2019). Journal of International Business Studies, 50(5), 763–789.

[12]. Fang, V. W., Tian, X., & Tice, S. (2014). Does stock liquidity enhance or impede firm innovation? The Journal of Finance, 69(5), 2085–2125.

[13]. Du, S., Bhattacharya, C., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management Reviews, 12(1), 8–19.

[14]. Haskel, J., & Westlake, S. (2017). Capitalism without capital. Princeton University Press.

[15]. Fang, L. H., Tian, X., & Tice, S. (2014). Innovation and firm value: Evidence from the Journal of Finance. The Journal of Finance, 69(5), 2085–2125.

[16]. Aggarwal, R., Erel, I., Ferreira, M., & Matos, P. (2011). Does governance travel around the world? Evidence from institutional investors. Journal of Financial Economics, 100(1), 154–181.

Cite this article

Zhang,W. (2025). Valuation Discrepancy of Coffee Chains in the US and China: A Capital Market Perspective . Advances in Economics, Management and Political Sciences,186,56-60.

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Volume title: Proceedings of ICMRED 2025 Symposium: Effective Communication as a Powerful Management Tool

ISBN：978-1-80590-153-2(Print) / 978-1-80590-154-9(Online)
Editor：Lukáš Vartiak
Conference website: https://2025.icmred.org/Bratislava.html
Conference date: 30 May 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.186
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. The Tale of 2023 in 10 charts. (2023, December 17). Goldman Sachs Global Investment Research. Retrieved from https://www.gspublishing.com/content/research/en/reports/2023/12/17/7e30caa9-30d8-40b7-90c1-6ddd758de9d1.html

[2]. La Porta, R., De‐Silanes, F. L., & Shleifer, A. (2006). What works in securities laws? The Journal of Finance, 61(1), 1–32.

[3]. Liu, J., Nissim, D., & Thomas, J. (2002). Equity valuation using multiples. Journal of Accounting Research, 40(1), 135–172.

[4]. Lie, E., & Lie, H. J. (2002). Multiples used to estimate corporate value. Financial Analysts Journal, March/April, 44–54.

[5]. Henschke, S., & Homburg, C. (2009). Equity valuation using multiples: Controlling for differences between firms. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1270812

[6]. Bhojraj, S., & Lee, C. M. C. (2002). Who is my peer? A valuation-based approach to the selection of comparable firms. Journal of Accounting Research, 40(2), 407–439.

[7]. Laeven, L., & Levine, R. (2009). Bank governance, regulation and risk taking. Journal of Financial Economics, 93(2), 259–275.

[8]. Doidge, C., Karolyi, G. A., & Stulz, R. M. (2004). Why are foreign firms listed in the U.S. worth more? Journal of Financial Economics, 71(2), 205–238.

[9]. Bushman, R. M., Piotroski, J. D., & Smith, A. J. (2004). What determines corporate transparency? Journal of Accounting Research, 42(2), 207–252.

[10]. Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance, 52(2), 737–783.

[11]. Cao, J., Duanmu, J. L., & Rodríguez, D. (2019). Journal of International Business Studies, 50(5), 763–789.

[12]. Fang, V. W., Tian, X., & Tice, S. (2014). Does stock liquidity enhance or impede firm innovation? The Journal of Finance, 69(5), 2085–2125.

[13]. Du, S., Bhattacharya, C., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management Reviews, 12(1), 8–19.

[14]. Haskel, J., & Westlake, S. (2017). Capitalism without capital. Princeton University Press.

[15]. Fang, L. H., Tian, X., & Tice, S. (2014). Innovation and firm value: Evidence from the Journal of Finance. The Journal of Finance, 69(5), 2085–2125.

[16]. Aggarwal, R., Erel, I., Ferreira, M., & Matos, P. (2011). Does governance travel around the world? Evidence from institutional investors. Journal of Financial Economics, 100(1), 154–181.

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