NEW EVIDENCE OF RELATIONSHIP BETWEEN TRADITIONAL MEASURES OF PERFORMANCE AND THOSE BASED ON VALUE CREATION FROM THE COST OF CAPITAL

2014 ◽  
pp. 125-143
Author(s):  
Silvana Dalmutt Kruger ◽  
Sérgio Murilo Petri
Keyword(s):  
Value Creation ◽  
Cost Of Capital ◽  
The Cost ◽  
New Evidence ◽  
Measures Of Performance

International Real Estate Review

2015 ◽  
Vol 18 (1) ◽  
pp. 01-43
Author(s):  
Alain Chaney ◽  
◽  
Martin Hoesli ◽  
Keyword(s):  
Real Estate ◽  
Opportunity Cost ◽  
Cost Of Capital ◽  
Individual Property ◽  
Percentage Points ◽  
Capitalization Rate ◽  
The Individual ◽  
The Cost ◽  
New Evidence ◽  
Appraisal Smoothing

This paper contributes to the debate about capitalization rate determinants by comparing the driving factors of appraisal-based cap rates with those of transaction-based cap rates. By using a rich database of real estate transactions in Switzerland for the period of 1985¡V2010, we identify several property-specific variables that have not been used in prior research and that increase the explained portion of the cap rate variance by as much as 10 percentage points. The results show that compared to investors, appraisers overweight factors that they can easily observe when they appraise a property, at the cost of variables related to growth expectations and the opportunity cost of capital. This has two implications. First, as the easily observable factors hardly change over time, while the latter variables change frequently and significantly, it provides new evidence that may add to the appraisal-smoothing discussion. Second, investors put less emphasis on factors that are diversifiable, which suggests that they favor a portfolio perspective, whereas the focus of the appraisers is more on the individual property level.

scholarly journals The relationship between labour unions’ bargaining power and firms’ operating flexibility: New evidence from emerging markets

2015 ◽  
Vol 46 (4) ◽  
pp. 65-76 ◽  
Author(s):  
I. G. Choi ◽  
P. Sohn ◽  
J-Y. Seo
Keyword(s):  
Bargaining Power ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Firm Level ◽  
Labour Unions ◽  
Capital Costs ◽  
Financial Firms ◽  
Union Coverage ◽  
The Cost ◽  
New Evidence

This study analyses the relevance between the bargaining power of labour unions and the operating flexibility on firms’ capital costs by using non-financial firms listed on the Korean stock exchange from 1999 to 2013. Under the assumption that constraints in business activities attributed to the collective bargaining power of labour unions lead to reduced operating flexibility and increased capital costs, we test this notion empirically; the main test results are as follows: First, we find from portfolio analysis that the cost of capital is higher for firms in more unionized industries. Second, we find that union coverage positively affects the cost of capital at a significant level. Third, we confirm through robustness tests that the industry adjusted union coverage (IAUC) also has a positive effect on the cost of capital at a significant level. As a result, the effect holds after controlling for a host of industry- and firm-level characteristics, and is stronger when unions have more favourable bargaining power. Thus, our findings are consistent with the hypothesis that the increase of labour unions’ bargaining power leads to raise firms’ capital costs by decreasing operating flexibility in the Korean firms.

scholarly journals Value Creation and Competitive Advantage: Empirical Evidence from Dividend Champions of the S&P 500

2018 ◽  
Vol 13 (12) ◽  
pp. 50 ◽  
Author(s):  
Marina Damilano ◽  
Nicola Miglietta ◽  
Enrico Battisti ◽  
Fabio Creta
Keyword(s):  
Comparative Analysis ◽  
Competitive Advantage ◽  
Value Creation ◽  
Average Cost ◽  
Cost Of Capital ◽  
Weighted Average ◽  
The Us ◽  
The Cost ◽  
In Virtue Of ◽  
Research Show

The aim of the paper is to verify, through the measurement of value creation, the existence of a competitive advantage in those companies recognized as “Dividend Champions” in the S&P 500. The paper uses a quantitative and explorative method of research and is divided into two sections: in the first, it identifies, within the S&P 500, those companies that have systematically, for more than 40 years, distributed dividends that have grown each year (60 firms), and in the second, it gives a comparative analysis of the Return on Invested Capital and Weighted Average Cost of Capital of the analysed firms, in order to investigate the existence of a competitive advantage. The results of our research show that the “Dividend Champions” have, in comparison to their main competitors of reference in the US market, a lasting competitive advantage, in virtue of a higher profitability with respect to the cost of capital. Specifically, we can observe that the “Dividend Champions”, classified by sector, are also “Value Champions”, able to beat competitors and having a lasting competitive advantage

An Introduction to the Cost of Capital

2010 ◽  
Author(s):  
Ignacio Velez-Pareja ◽  
Joseph Tham
Keyword(s):  
Cost Of Capital ◽  
The Cost
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