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Review of Accounting Studies

, Volume 14, Issue 2–3, pp 260–268 | Cite as

Discussion of “on the relation between expected returns and implied cost of capital”

  • Richard A. Lambert
Article

Abstract

This paper discusses the paper “On the relationship between expected returns and implied cost of capital” by Hughes, Liu, and Liu. The discussion focuses on developing the intuition behind the mathematical results and on extensions of the analysis that future research could address.

Keywords

Cost of capital Stochastic 

JEL Classification

M41 

References

  1. Easton, P., Taylor, G., Shroff, P., & Sougiannis, T. (2002). Using forecasts of earnings to simultaneously estimate growth and the rate of return on equity investment. Journal of Accounting Research, 40, 657–676.CrossRefGoogle Scholar
  2. Gebhardt, W., Lee, C., & Swaminathan, B. (2001). Toward an implied cost of capital. Journal of Accounting Research, 39, 135–176.CrossRefGoogle Scholar
  3. Hughes, J., Liu, J., & Liu, J. (2009). On the relation between expected returns and implied cost of capital. Review of Accounting Studies. doi: 10.1007/s11142-009-9093-8.
  4. Ogneva, M., Subramanyan, K., & Raghunandan, K. (2007). Internal control weaknesses and cost of equity: Evidence from SOX 404 disclosures. The Accounting Review, 82(5), 1255–1297.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.The Wharton SchoolUniversity of PennsylvaniaPhiladelphiaUSA

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