Frequently analysts and teachers use the capitalized rate of interest for the cost of debt when forecasting and discounting cash flows. On the other hand, some authors (and analysts) estimate the interest payments when forecasting annual financial statements or cash flows based on the average of...

An increasing fraction of firms worldwide operate in multiple countries. We study the costs and benefits of being multinational in firms' corporate financial decisions and survey the related academic evidence. We document that, among U.S. publicly traded firms, the prevalence of multinationals...

We investigate the relation between firms' weighted average cost of capital and internal financial resources, using mandatory pension contributions as a proxy for internal financial resources. Rauh (2006) documents a negative association between mandatory pension contributions and capital...

In this article, we show how to value projects financed by subsidized loans using the standard WACC method, with three distinct assumptions concerning the debt ratio targeted by the firm. In fact, the subsidized loan amount used to calculate this debt ratio can be determined according to book...

We investigate the association between the existence of the risk committee and the implied cost of equity capital in a unique institutional setting where the formation of the board risk committee as part of the risk governance mechanism is not mandatory in the Gulf Cooperation Council (GCC)...

A common procedure for determining the cost of capital for capital investment decisions involves adjusting an unlevered beta for the risk of financial leverage. This note demonstrates that a widespread practice of levering the beta coefficients using the formula of Hamada implies a possibility...

Enterprise Risk Management (ERM) is a process that manages all risks in an integrated, holistic fashion by controlling and coordinating any offsetting risks across the enterprise. This research investigates whether the adoption of the ERM approach affects firms' cost of equity capital. We...

This paper proposes a new discounted cash flows' valuation setup, and derives a general expression for the tax shields' discount rate. This setup applies to any debt policy and any cash flow pattern. It only requires the equality at any time between the assets side and the liabilities side of...

Mandatory pension contributions (MCs) are negative shocks to a firm's liquidity that can unfavorably impact its cost of capital, financing, and investment plans. We study whether firms faced with MCs use both non-cash (NEM) and cash generating earnings management (CEM) to partly offset their...

We examine whether CEO extraversion, an important personality trait associated with leadership, affects firms' expected cost of equity capital. We measure CEO extraversion using CEOs' speech patterns during the unscripted portion of conference calls. After controlling for several CEO and firm...