The public and private sector costs of capital differ in the presence of taxes, because taxes are a cost to the private but not the public sector. We use a quasi-arbitrage approach to show how to include taxes in a comparison of capital costs. We find that taxes induce distortions that generate...

We investigate the relative ability of two measures of the market implied cost of capital to predict aggregate equity market returns. One is Aggregate ICC, which is a weighted average of individual firms' ICC's. The other is ICC calculated using index information (Index ICC). Index ICC predicts...

This paper examines the issues of the appropriate cost of capital for companies operating in the regulated water industry in the UK. This issue is of importance at the current time because the water regulator Ofwat is currently in the final stages of its periodic review of prices to set for the...