Based on an example Loffler claims in his recent paper quot;Miles-Ezzell's WACC Approach Yields Arbitragequot;, that the application of the Miles/Ezzell-WACC may offer arbitrage opportunities. He concludes that the Miles/Ezzell-WACC is not applicable without restrictions. We discuss the example...

This short note discusses the link between the certainty equivalent approach of modern asset pricing theory and the cost of capital approach in DCF-models in a capital market model. Therefore we distinguish two notions of cost of capital: (a) risk-adjusted discount rates for a particular cash...

German Abstract: In diesem Beitrag diskutieren wir anhand des Deutschen Corporate Governance Kodex Mög-lichkeiten und Grenzen einer (semi)standardisierten Berichterstattung über die Governance eines Unternehmens mit Hilfe von Corporate Governance Kodizes, verstanden als eine an die lokalen...

In a recent contribution Jorg Wiese discusses the problem of how to adopt a version of the single-period Tax-CAPM of Brennan (1970) for multiperiod valuation problems. With this short note, we would like to demonstrate the following problems of Wiese's analysis:(1) the valuation calculus...

New shares of seasoned equity offerings are often issued with a sustainable discount. This discount implies a dilution in the sphere of old shareholders. Now, at least in Germany the old shareholders are commonly compensated for the dilution effect by issuing rights. However, the dilution also...

For investment projects with finite horizon and deterministic leverage the idea of weighted average cost of capital (wacc) was introduced 1980 by Miles/Ezzell under restrictive assumptions. In this paper we deal with the wacc idea in the context of arbitrage-free capital markets by relaxing the...

The German corporate governance system changed substantially over the last ten years. Meanwhile, ownership structures of German firms changed significantly. We examine the phenomenon of changing ownership structures by studying blockholdings of German large caps between 1997 and 2006. We examine...

Based on an example Loeffler claims in a recent FINANZ BETRIEB-article that the application of the Miles/Ezzell-WACC may offer arbitrage opportunities. He concludes that the Miles/Ezzell-WACC is not applicable without restrictions. We discuss the example of Louml;ffler and show that either (a)...

We investigate the relation between state ownership and corporate investment. In a matched panel of 624 European firms, state ownership curtails firms' responsiveness to investment opportunities. With increasing government ownership, investment becomes more sensitive to internal funds when...

This paper explores an extensive novel panel-data set covering more than 4,000 listed firms in 16 European countries to study the effects of shareholder protection on ownership structure and firm performance. Recent research criticizes the existing law and finance literature using (i)...