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Estimating implied cost of equity capital using accounting - based valuation models
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Orientador(es)
Resumo(s)
Cost of equity capital is a highly critical and therefore widely researched input for
numerous financial models used in corporate practice. In the past decades academic researchers
developed implied cost of equity capital (ICE) models using accounting-based valuation
approaches and analyst forecasts to estimate the return required by equity investors. While
academic literature on this topic aims for empirical contributions, my study presents a practical
implementation of these methods for finance professionals. Specifically, I develop a Microsoft
Excel-based tool that incorporates the most prevalent ICE models and provides a framework to
evaluate their potential ability to predict future realized returns.
Descrição
Palavras-chave
Corporate finance Corporate valuation Cost of equity Implied cost of capital Equity premium Analyst forecasts Residual income valuation Abnormal earnings growth valuation