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The cost of equity of network operators : empirical evidence and regulatory practice
Schäffler, Stephan; Weber, Christoph - 2011
regulation for utilities firms has made the task of setting an adequate cost of equity more difficult. Firstly, Legal Unbundling … regulation schemes has reinforced the importance of setting the equity return adequately. The approaches chosen by regulatory …
Persistent link: https://www.econbiz.de/10010426697
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An evaluation of different approaches to capital structure regulation
Schaeffler, Stephan - 2012
With the introduction of incentive regulation in many network industries, different approaches how to remunerate … invested capital have been used. Under incentive regulation, many regulators remunerate the regulated asset base with a ….e. finding the right balance between equity financing and debt. Taggert (1981) shows that rate-of-return regulation creates an …
Persistent link: https://www.econbiz.de/10010430806
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Incorporating funding costs in top-down stress tests
Korsgaard, Søren - 2017
Central banks and supervisory authorities regularly conduct stress tests of banks. As losses accumulate in stress scenarios, banks' equity position worsens, and they must pay higher interest rates to retain funding. I explore how variations of Merton-type models can be used to measure bank risk,...
Persistent link: https://www.econbiz.de/10011614070
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The Expected Cost of Equity in the UK Revisited
Gregory, Alan - 2023
Estimates of the expected return on equities are of central importance for capital budgeting purposes, actuarial calculations (expected wealth) and, in countries with regulated utilities, for setting the allowed rate of return. The starting point for any of these purposes is the simple annual...
Persistent link: https://www.econbiz.de/10014353044
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Global Evidence on Incentives for Voluntary Accounting Disclosures and the Effect on Cost of Capital
Francis, Jere R.; Khurana, Inder K.; Pereira, Raynolde - 2004
This study provides international evidence that external financing dependence creates incentives for firms to undertake a higher level of voluntary accounting disclosure. For a sample of 856 observations from 34 countries and 18 different manufacturing industry sectors, we document that firms in...
Persistent link: https://www.econbiz.de/10014075023
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Are Firm- and Country-Specific Governance Substitutes? Evidence from Financial Contracts in Emerging Markets
Francis, Bill B. - 2012
We investigate how borrowers' corporate governance influences bank loan contracting terms in emerging markets and how this relation varies across countries with different country-level governance. We find that borrowers with stronger corporate governance obtain favorable contracting terms with...
Persistent link: https://www.econbiz.de/10013107612
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WACC and CAPM According to Utilities Regulators : Confusions, Errors and Inconsistencies
Fernandez, Pablo - 2019
Regulators of many countries try to find the “true” WACC of Electricity, Gas, Water… activities. All their documents have in common a main confusion: they do not differentiate among expected, required, historical, and regulator allowed returns, which are 4 very different concepts. Most of...
Persistent link: https://www.econbiz.de/10012893723
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Regulation and the Cost of Equity Capital in Australia
Lally, Martin - 2010
This paper examines four issues associated with the Officer model, in the context of estimating the cost of equity capital for regulatory purposes. The conclusions are thus. First, regarding the issue of foreign investors, continued use of a version of the Capital Asset Pricing Model that...
Persistent link: https://www.econbiz.de/10014199181
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Measuring the Cost of Regulation : A Text-Based Approach
Calomiris, Charles W. - 2020
study the effect of regulation on companies' operating fundamentals, growth, leverage, and equity returns. We find that …
Persistent link: https://www.econbiz.de/10012839955
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Cost of Equity and Leverage Under 'Fair' Rate-of-Return Regulation
Srinivasan, R. - 2012
A rate-of-return regime characterized by "fairness" satisfies two criteria: the total allowed return on the rate base is equal to the cost of capital, and the regulated firm should be able to raise capital without either gain or loss to existing equity holders. Assuming a monopoly firm with a...
Persistent link: https://www.econbiz.de/10013100733