We connect conservative accounting to the cost of capital by developing an accounting model within an asset pricing framework. The model has three distinctive features: (1) transaction-cycle-conformity, where the book value of an investment equals the value of cash at the beginning and the end...

Calculations of the Implied Cost of Capital (ICC) typically fail on validation criteria. This paper provides an explanation. Though nominally working with accounting-based valuation models, the standard approach fails to recognize accounting principles that govern the accounting. Those...

We connect conservative accounting to the cost of capital by developing an accounting model within an asset pricing framework. The model has three distinctive features: (1) transaction-cycle-conformity, where the book value equals the value of cash at the beginning and the end of a cash-to-cash...