The Paris Agreement signals increased climate awareness and potential changes in the business environment as an economy decarbonizes. Ratification of the Paris Agreement could heighten climate-related transition risks, especially for companies in high-emitting industries. This research analyzes...

I use an accounting reform to assess the agency cost of debt in diversified firms. Firms that switch from single-to-multisegment following the reform suffer a 12% increase in the bond spread than their standalone peers. Consistent with lenders anticipating underinvestment and asset substitution...

Equity option markets can have a dual effect on firm's' cost of debt. On one hand, options attract more informed investors that increase price informativeness and reduce information asymmetries in the market, facilitating firm financing. On the other, by attracting more informed investors that...

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...

The Spanish version of this paper can be found at http://ssrn.com/abstract=1997065This chapter is devoted to the definition and application of the “cost of capital” concept to the valuation of cash flows from different points of view. We present an approach to estimate the cost of debt and...

This paper investigates the impact of the corporate life cycle on the cost of equity capital. Using a sample of Australian firms during the years 1990–2012, we find that the proxies for the cost of equity capital vary across the life cycle of the firm. In particular, we find that the cost of...

Patents valuation methods are mostly income or income-market-based. In these methods one of the key estimate is the cost of capital. The paper analyses the question of the patents cost of capital from two complementary viewpoints: (i) theoretical aspects of estimating the cost of capital for...

Standard theory implies that the discount rates used by firms in investment decisions (i.e., their required returns to capital) determine investment and transmit financial shocks to the real economy. However, there exists little evidence on how firms' discount rates change over time and affect...

From the bottom in March 2009, developed stock exchanges returned to their levels before the crises, which were not the case with the Macedonian, and the other SEE Stock Exchanges. Thus, in this paper we explain some of the reasons for this stagnant situation through analysis of Macedonian...

We argue that the CAPM may be a reasonable model for estimating the cost of capital for projects in spite of increasing empirical evidence in the literature against the CAPM based on stock returns. As McDonald and Siegel (1985) and Berk, Green and Naik (1999) point out, stocks are backed by...