Advertisement

1991: Some Financial Perspectives on Comparative Costs of Capital

  • J. Fred Weston

Abstract

Much has been written on whether firms in some countries have a lower cost of capital than firms in other countries. This chapter first reviews the cost of capital measurement methodologies employed in prior studies of financially derived competitive advantage (FDCA). The problems with these studies motivate use of an alternative methodology based on widely accepted models of asset pricing in the literature of financial economics.1

Keywords

Asset Price Equity Capital NBER Working Paper Arbitrage Price Theory Weighted Average Cost 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Ando, A., and A. Auerbach, “The Corporate Cost of Capital in the U.S. and Japan: A Comparison,” in J. Shoven, ed., Government Policy towards Industry in the United States and Japan, Cambridge: Cambridge University Press, 1985, pp. 21–49.Google Scholar
  2. ——, “The Corporate Cost of Capital in Japan and the United States: A Comparison,” in J. Shoven, ed., Government Policy towards Industry in the United States and Japan, Cambridge University Press, 1988a.Google Scholar
  3. ——, “The Cost of Capital in the United States and Japan: A Comparison,” Journal of the Japanese and International Economics, 2, 1988b, pp. 134–158.CrossRefGoogle Scholar
  4. ——, “The Cost of Capital in Japan: Recent Evidence and Further Results,” NBER Working Paper No. 3371, 1990.CrossRefGoogle Scholar
  5. Bernheim, D., and J. Shoven, “Taxation and the Cost of Capital,” unpublished manuscript, Stanford University, 1986.Google Scholar
  6. Cho, D., C. Eun; and L. Senbet, “International Arbitrage Pricing Theory: An Empirical Investigation,” Journal of Finance, 41, 1986, pp. 313–329.CrossRefGoogle Scholar
  7. Frankel, Jeffrey A., “Japanese Finance: A Survey,” NBER Working Paper No. 3156, 1990.Google Scholar
  8. French, K. and J. Poterba, “Are Japanese Stock Prices Too High?” CRSP Seminar on the Analysis of Prices, University of Chicago, April 1989.Google Scholar
  9. Gultekin, M., N. Gultekin; and A. Penati, “Capital Controls and International Capital Market Segmentation: The Evidence from the Japanese and American Stock Markets,” Journal of Finance, 44, 1989, pp. 849–869.CrossRefGoogle Scholar
  10. Hamao, Y., “An Empirical Examination of the Arbitrage Pricing Theory Using Japanese Data,” Working Paper, University of California, San Diego, 1988.Google Scholar
  11. Hatsopoulis, George N. and Stephen H. Brooks, “The Gap in the Cost of Capital: Causes, Effects, and Remedies,” in R. Landau and Dale Jorgensen, eds., Technology and Economic Policy, Cambridge: Ballinger, 1986, Chapter 12, pp. 221–280.Google Scholar
  12. Malkiel, Burton G., “The Capital Formation Problem in the United States,” The Journal of Finance, 34, May 1979, pp. 291–306.CrossRefGoogle Scholar
  13. McCauley, R., and S. Zimmer, “Explaining International Differences in the Cost of Capital,” FRBNY Quarterly Review, Summer 1989, pp. 7–28.Google Scholar
  14. Roll, R. W. and S. A. Ross, “An Empirical Investigation of the Arbitrage Pricing Theory,” The Journal of Finance, 35, December 1980, pp. 1073–1103.CrossRefGoogle Scholar
  15. Ross, S. A., “The Arbitrage Theory of Capital Asset Pricing,” Journal of Economic Theory, 13, December 1976, pp. 341–360.CrossRefGoogle Scholar
  16. Solnik, B., “International Arbitrage Pricing Theory,” Journal of Finance, 38, 1983, pp. 449–457.CrossRefGoogle Scholar

Copyright information

© J. Fred Weston 2016

Authors and Affiliations

  • J. Fred Weston
    • 1
  1. 1.University of CaliforniaLos AngelesUSA

Personalised recommendations