Alternative Estimates of the Cost of Equity Capital for Australian Firms

Truong, Giang; Partington, Graham

doi:10.2139/ssrn.1009125

Cited by 3 publications

(3 citation statements)

References 44 publications

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“…The average cost of equity of our study is consistent with prior Australian study ofHasan et al (2015). Furthermore,Truong and Partington (2007) show that cost of equity estimates for the Australian firms are in the range of 10-17%.…”

supporting

confidence: 89%

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Do family firms pay less for external funding?

Ali¹,

Miglani

Dang

et al. 2021

Australian Journal of Management

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We examine the impact of family control on the cost of raising external funds by family enterprises. Using a sample of Australian publicly listed firms, we find a significantly negative relation between cost of newly raised capital and family control. Moreover, we show that this relationship varies with the quality of corporate governance and the quality of firm’s information environment. Furthermore, we conduct several robustness checks and consistently find that our main results remain unchanged. Overall, our evidence suggests that family firms have easier access to external financing fostered by family involvement in the ownership and control. JEL Classification: G31; G32; M41; M42

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supporting

confidence: 89%

“…Furthermore, Truong and Partington (2007) show that cost of equity estimates for the Australian firms are in the range of 10%-17%. 5. argue that some families are able to exert control with minimal fractional ownership, while others require a larger stake for the same level of control.…”

Section: Family Ceomentioning

confidence: 99%

Do family firms pay less for external funding?

Ali¹,

Miglani

Dang

et al. 2021

Australian Journal of Management

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“…While there is an extensive list of ICC studies performed in the US (Claus and Thomas, 2001;Gebhardt et al, 2001;Gode and Mohanram, 2003) and studies that examine international differences in implied costs of capital (Hail and Leuz, 2006), Australian evidence is rare and limited. There have been only two studies to date that focus on the Australian market and generate estimates of an Australian equity risk premiumalbeit with limitations in sample size, study length and in addressing analyst forecast bias (Chen et al, 2004;Truong and Partington, 2007). Given this gap within the Australian cost of capital literature, the main motivation for and research objective of this study is to provide out-of-sample evidence on the performance of ICC measures estimated using cross-sectional model earnings forecasts in an Australian setting.…”

Section: Introductionmentioning

confidence: 99%

Analyst versus model‐based earnings forecasts: implied cost of capital applications

Paton

Cannavan

Gray

et al. 2019

Accounting & Finance

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We find that a composite implied cost of capital (ICC) estimate – based on the earnings forecasts generated by cross‐sectional models – is highly correlated with future realised returns in both portfolio‐ and regression‐based tests. By contrast, we find very little evidence for an association with future realised returns for an ICC estimate based on analyst earnings forecasts. We also document the time‐varying nature of expected returns and risk premia, and provide up‐to‐date estimates of an implied Australian market risk premium.

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