IDEAS home Printed from https://ideas.repec.org/a/rje/bellje/v10y1979iautumnp619-635.html
   My bibliography  Save this article

Estimating the Cost of Equity Capital for Electric Utilities: 1958-1976

Author

Listed:
  • Howard E. Thompson

Abstract

This articles uses an infinite growth model to estimate the cost of equity capital for electric utilities for the period 1958-1976. The infinite growth model permits the development of a simple linear regression relating market-price-to-book-value-ratios to rates of return. From this regression, an estimate of the average cost of equity capital can be derived for the firms in the sample. This particular study neither specifically recognizes capital structure or dividend policies of the individual firms nor specifically analyzes the effects of flow through-normalization or allowance for funds used during construction differences among companies. Although the analysis is historical, the methodology holds promise for being useful in determining "just and reasonable" rates of return in rate cases.

Suggested Citation

  • Howard E. Thompson, 1979. "Estimating the Cost of Equity Capital for Electric Utilities: 1958-1976," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 619-635, Autumn.
    • Handle: RePEc:rje:bellje:v:10:y:1979:i:autumn:p:619-635
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0361-915X%28197923%2910%3A2%3C619%3AETCOEC%3E2.0.CO%3B2-B&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roger Buckland & Julian Williams & Janice Beecher, 2015. "Risk and regulation in water utilities: a cross-country comparison of evidence from the CAPM," Journal of Regulatory Economics, Springer, vol. 47(2), pages 117-145, April.
    2. Wing-keung Wong & Raymond Chan, 2004. "On the estimation of cost of capital and its reliability," Quantitative Finance, Taylor & Francis Journals, vol. 4(3), pages 365-372.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:bellje:v:10:y:1979:i:autumn:p:619-635. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.rje.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.