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Cost Of Capital Estimation For Major Corporations. Evidence On Best Practice

Author

Listed:
  • Angela-Maria Filip

    (“Babeş-Bolyai” University of Cluj-Napoca)

  • Daniela Georgeta Beju

    (“Babeş-Bolyai” University of Cluj-Napoca)

  • Maria-Miruna Pochea

    (“Babeş-Bolyai” University of Cluj-Napoca)

  • Maria Ulici

    (“Babeş-Bolyai” University of Cluj-Napoca)

Abstract

This paper presents the theoretical background concerning capital budgeting techniques and cost of capital estimation and a literature review on cost of capital estimation practice applied by key European corporations as opposed to Asian and American firms. Previous studies showed that the most commonly used model for estimating the cost of equity is the CAPM with major differences concerning the choice of variables. This broad estimating divergence has major implications on the decision making process and capital budgeting techniques.

Suggested Citation

  • Angela-Maria Filip & Daniela Georgeta Beju & Maria-Miruna Pochea & Maria Ulici, 2011. "Cost Of Capital Estimation For Major Corporations. Evidence On Best Practice," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 5(5(558)(su), pages 273-277, July.
    • Handle: RePEc:agr:journl:v:5(558)(supplement):y:2011:i:5(558)(supplement):p:273-277
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