scholarly journals A preliminary framework to estimate and disclose ex-ante cost of capital for (fair) valuation

2016 ◽  
Vol 1 (1) ◽  
pp. 61
Author(s):  
Josilmar Cordenonssi Cia ◽  
Joanília Neide De Sales Cia ◽  
Luiz Carlos Jacob Perera
Keyword(s):  
Cost Of Capital ◽  
Ex Ante ◽  
Fair Valuation

scholarly journals A preliminary framework to estimate and disclose ex-ante cost of capital for (fair) valuation

2016 ◽  
Vol 1 (1) ◽  
pp. 61
Author(s):  
Joanília Neide De Sales Cia ◽  
Luiz Carlos Jacob Perera ◽  
Josilmar Cordenonssi Cia
Keyword(s):  
Cost Of Capital ◽  
Ex Ante ◽  
Fair Valuation

The Influence of E-disclosure on the Ex-Ante Cost of Capital of Listed Companies in Brazil

2014 ◽  
Vol 13 (3) ◽  
pp. 335-365 ◽  
Author(s):  
Wesley Mendes-Da-Silva ◽  
Luciana Massaro Onusic ◽  
Daniel Reed Bergmann
Keyword(s):  
Cost Of Capital ◽  
Listed Companies ◽  
Ex Ante

scholarly journals Secondary Market Liquidity and Primary Market Pricing of Corporate Bonds

2019 ◽  
Vol 12 (2) ◽  
pp. 86 ◽  
Author(s):  
Michael A. Goldstein ◽  
Edith S. Hotchkiss ◽  
David J. Pedersen
Keyword(s):  
Asset Prices ◽  
Cost Of Capital ◽  
Secondary Market ◽  
Market Liquidity ◽  
Corporate Bond ◽  
Yield Spread ◽  
Market Pricing ◽  
Yield Spreads ◽  
Ex Ante ◽  
The Impact

This paper studies the link between secondary market liquidity for a corporate bond and the bond’s yield spread at issuance. Using ex-ante measures of expected liquidity at the time of issuance, based on the characteristics of the underwriting syndicate, we find an economically large impact of liquidity on yield spreads. We estimate that a 10% increase in expected liquidity implies a decrease in the yield spread at issuance of between 8% and 14%. Our results suggest that liquidity has an important effect on firms’ cost of capital, and they contribute to the literature which examines the impact of liquidity on asset prices.

Tax Avoidance and Ex Ante Cost of Capital

2015 ◽  
Author(s):  
Kirsten A. Cook ◽  
William Moser ◽  
Thomas C. Omer
Keyword(s):  
Cost Of Capital ◽  
Tax Avoidance ◽  
Ex Ante

Is the new issue puzzle real? Evidence from implied cost of capital

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Snow Han
Keyword(s):  
Initial Public Offering ◽  
Risk Premium ◽  
Cost Of Capital ◽  
Expected Returns ◽  
Limited Information ◽  
Content Type ◽  
Listed Firms ◽  
Implied Cost Of Capital ◽  
Ex Post ◽  
Ex Ante

PurposeThis study aims to provide new explanation of the new issue puzzle.Design/methodology/approachThis study uses market implied cost of capital (ICC), rather than ex post realized returns, as proxy for ex ante expected returns, and sheds new light on the question why initial public offering (IPO) firms underperform the market within a 3–5 years period after the offerings.FindingsUsing ICC, the author finds that the market expects to earn higher risk premium for new listing firms than similar firms, which is contradictory to the documented new issue puzzle. The higher expected returns come from higher idiosyncratic volatility for newly listed firms, which are young and have more growth opportunities. The author also reports that investors are negatively surprised by lower-than-expected performances of newly listed firms.Originality/valueThe author’s results provide new empirical evidence that the new issue puzzle does not exist. Previous results observed IPO firms' under-performance is attributable to that ex post realized returns are a noisy proxy for ex ante expected returns, especially for newly listed firms with limited information.

scholarly journals Information and Heterogeneous Beliefs: Cost of Capital, Trading Volume, and Investor Welfare

2013 ◽  
Vol 89 (1) ◽  
pp. 209-242 ◽  
Author(s):  
Peter O. Christensen ◽  
Zhenjiang Qin
Keyword(s):  
Information System ◽  
Risk Premium ◽  
Trading Volume ◽  
Cost Of Capital ◽  
Public Information ◽  
Exchange Economy ◽  
Substantial Impact ◽  
Certainty Equivalents ◽  
Ex Ante ◽  
The Impact

ABSTRACTIn an incomplete market with heterogeneous prior beliefs, we show that public information can have a substantial impact on the ex ante cost of capital, trading volume, and investor welfare. The Pareto efficient public information system is the system enjoying the maximum ex ante cost of capital and the maximum expected abnormal trading volume. Imperfect public information increases the gains-to-trade based on heterogeneously updated posterior beliefs. In an exchange economy, this leads to higher growth in the investors' certainty equivalents and, thus, a higher equilibrium interest rate, whereas the ex ante risk premium is unaffected by the informativeness of the public information system. Similar results are obtained in a production economy, but the impact on the ex ante cost of capital is dampened compared to the exchange economy due to welfare-improving reductions in real investments to smooth the investors' certainty equivalents over time.

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