Preliminary Views on the Determinants of the Cost of Capital for the Emergent Market of Romania
This paper investigates several factors affecting the
cost of capital for listed Romanian companies. Although there is a
large amount of literature investigating the drivers of the cost of
capital internationally, there is currently little evidence from
emergent markets. Based on a sample of 19 Romanian listed
companies followed by financial analysts for the years 2008-2010,
according to Thomson Reuters- I/B/E/S data base, the paper confirms
the international trends, showing that size, corporate governance
policies, and growth are negatively correlated with the cost of capital.
[1] Ahn, S. Y, Seung, M. C., Young, W. K. and Yong, K. Y. (2008)
"Implied Cost of Equity Capital in Earnings-Based Valuation Model:
Evidence from Korea", Asia-Pacific Journal of Financial Studies, 37(4),
599-626.
[2] Brugemann, U. and Homburg, C. (2007) "The Switch from German
GAAP to Internationally Accepted Accounting Standards and its Effects
on the Cost of Equity Capital", paper presented at the 30th Annual
Congress of the European Accounting Association, Lisbon, 25 -27
Aprilie.
[3] Botosan, C. and Plumlee M. (2005) ÔÇ×Assessing alternative proxies for
the expected risk premium", The Accounting Review, 80, 21-53.
[4] Bucharest Stock Exchange (2008) Corporate Governance Code,
http://www.bvb.ro/info/Rapoarte/Diverse/20090122%20Cod%20Guvern
anta%20Corporativa.pdf
[5] Chen, K.C.W., Chen, Z.H. and Wei, K.C.J. (2004) "Disclosure,
Corporate Governance, and the Cost of Equity Capital in Emerging
Markets", Hong Kong University of Science & Technology,
http://www.accountancy.smu.edu.sg/research/seminar/pdf/kevin_chen.p
df
[6] Christensen H. B., Lee, E. and Walker, M. (2007) "Cross-sectional
variation in the economic consequences of international accounting
harmonization: The case of mandatory IFRS adoption in the UK", The
International Journal of Accounting, vol. 42, issue 4, 341-379.
[7] Daske, H. (2006) "Economic Benefits of Adopting IFRS or US-GAAP -
Have the Expected Cost of Equity Capital Really Decreased?", Journal
of Business Finance & Accounting, Vol.33, No.3, 329-373.
[8] Dhaliwal, D. S., Spicer, B. H. and Vickrey, D. (1979) "The Quality Of
Disclosure And The Cost Of Capital", Journal Of Business Finance &
Accounting, 6, 245-266.
[9] Easton, P. and S. Monahan (2005) ÔÇ×An evaluation of accounting based
measures of expected returns", The Accounting Review 80, 501-538.
[10] Fama, E. and French, K. (1992). ÔÇ×The cross sections of expected stock
returns". Journal of Finance, 47, 427-466.
[11] Gebhardt, W., Lee, C. and Swaminathan, B. (2001) "Toward an implied
cost of capital", Journal of Accounting Research, Vol.39, 135-176.
[12] Gode, D. and Mohanram, P. (2003) "Inferring cost of capital using the
Ohlson-Juetter model", Review of Accounting Studies, Vol.8, 339-431.
[13] Hail, L. and Leuz, C. (2006) "International Differences in the Cost of
Equity Capital: Do Legal Institutions and Securities Regulation Matter?"
Journal of Accounting Research, Blackwell Publishing, 44(3), 485-531.
[14] Ionaşcu, I., Ionaşcu, M., Olimid, L. and Calu, D. (2007) "An empirical
evaluation of the costs of harmonising Romanian accounting with
international regulations (EU Directives and IAS/IFRS)", Accounting in
Europe, Volume 4, Issue 2, 169-206.
[15] Jermakowicz, E.K. and Gornik-Tomaszewski, S. (2006) Implementing
IFRS from the perspective of EU publicly traded companies, Journal of
International Accounting, Auditing and Taxation, vol. 15, 170-196.
[16] Koerniadi, Hardjo and Tourani Rad, Alireza (2009) Corporate
Governance, Financing Pattern and Cost of Capital: Evidence from
New Zealand Companies. 22nd Australasian Finance and Banking
Conference 2009, disponibil la SSRN:
http://ssrn.com/abstract=1460316.
[17] Leuz and Verrecchia (2000) "The Economic Consequences of Increased
Disclosure", Journal of Accounting Research, Vol. 38, Supplement:
Studies on Accounting Information and the Economics of the Firm., 91-
124.
[18] Nasr, B. H., Boubakri, N. and Cosset, J.-C. (2008) The Political
Determinants of the Cost of Equity: Evidence from Newly Privatized.
AFFI/EUROFIDAI, Paris Finance International Meeting AFFI -
EUROFIDAI. Available at SSRN: http://ssrn.com/abstract=1282194
[19] Olimid. L., Ionaşcu M., Popescu L. and Popescu V. D. (2009),
Corporate Governance in Romania. A Fragile Start, Proceedings of
ECMLG 2009, the 5th European Conference on Management,
Leadership and Governance, held at the ATExcelixi Training and
Conference Centre, Athens, Greece, 5-6 November 2009, 151-156.
[20] Omran, M and
Pointon, J. (2004). ÔÇ×The Determinants of the Cost of
Capital by Industry within an Emerging Economy: Evidence from
Egypt", International Journal of Business, 9(3), 237-258.
[21] Zhu, F. (2009), Cost of Capital and Corporate Governance:
International Evidence, University of Wisconsin, Milwaukee.
http://69.175.2.130/~finman/Reno/Papers/cocfgovff-fn.pdf
[1] Ahn, S. Y, Seung, M. C., Young, W. K. and Yong, K. Y. (2008)
"Implied Cost of Equity Capital in Earnings-Based Valuation Model:
Evidence from Korea", Asia-Pacific Journal of Financial Studies, 37(4),
599-626.
[2] Brugemann, U. and Homburg, C. (2007) "The Switch from German
GAAP to Internationally Accepted Accounting Standards and its Effects
on the Cost of Equity Capital", paper presented at the 30th Annual
Congress of the European Accounting Association, Lisbon, 25 -27
Aprilie.
[3] Botosan, C. and Plumlee M. (2005) ÔÇ×Assessing alternative proxies for
the expected risk premium", The Accounting Review, 80, 21-53.
[4] Bucharest Stock Exchange (2008) Corporate Governance Code,
http://www.bvb.ro/info/Rapoarte/Diverse/20090122%20Cod%20Guvern
anta%20Corporativa.pdf
[5] Chen, K.C.W., Chen, Z.H. and Wei, K.C.J. (2004) "Disclosure,
Corporate Governance, and the Cost of Equity Capital in Emerging
Markets", Hong Kong University of Science & Technology,
http://www.accountancy.smu.edu.sg/research/seminar/pdf/kevin_chen.p
df
[6] Christensen H. B., Lee, E. and Walker, M. (2007) "Cross-sectional
variation in the economic consequences of international accounting
harmonization: The case of mandatory IFRS adoption in the UK", The
International Journal of Accounting, vol. 42, issue 4, 341-379.
[7] Daske, H. (2006) "Economic Benefits of Adopting IFRS or US-GAAP -
Have the Expected Cost of Equity Capital Really Decreased?", Journal
of Business Finance & Accounting, Vol.33, No.3, 329-373.
[8] Dhaliwal, D. S., Spicer, B. H. and Vickrey, D. (1979) "The Quality Of
Disclosure And The Cost Of Capital", Journal Of Business Finance &
Accounting, 6, 245-266.
[9] Easton, P. and S. Monahan (2005) ÔÇ×An evaluation of accounting based
measures of expected returns", The Accounting Review 80, 501-538.
[10] Fama, E. and French, K. (1992). ÔÇ×The cross sections of expected stock
returns". Journal of Finance, 47, 427-466.
[11] Gebhardt, W., Lee, C. and Swaminathan, B. (2001) "Toward an implied
cost of capital", Journal of Accounting Research, Vol.39, 135-176.
[12] Gode, D. and Mohanram, P. (2003) "Inferring cost of capital using the
Ohlson-Juetter model", Review of Accounting Studies, Vol.8, 339-431.
[13] Hail, L. and Leuz, C. (2006) "International Differences in the Cost of
Equity Capital: Do Legal Institutions and Securities Regulation Matter?"
Journal of Accounting Research, Blackwell Publishing, 44(3), 485-531.
[14] Ionaşcu, I., Ionaşcu, M., Olimid, L. and Calu, D. (2007) "An empirical
evaluation of the costs of harmonising Romanian accounting with
international regulations (EU Directives and IAS/IFRS)", Accounting in
Europe, Volume 4, Issue 2, 169-206.
[15] Jermakowicz, E.K. and Gornik-Tomaszewski, S. (2006) Implementing
IFRS from the perspective of EU publicly traded companies, Journal of
International Accounting, Auditing and Taxation, vol. 15, 170-196.
[16] Koerniadi, Hardjo and Tourani Rad, Alireza (2009) Corporate
Governance, Financing Pattern and Cost of Capital: Evidence from
New Zealand Companies. 22nd Australasian Finance and Banking
Conference 2009, disponibil la SSRN:
http://ssrn.com/abstract=1460316.
[17] Leuz and Verrecchia (2000) "The Economic Consequences of Increased
Disclosure", Journal of Accounting Research, Vol. 38, Supplement:
Studies on Accounting Information and the Economics of the Firm., 91-
124.
[18] Nasr, B. H., Boubakri, N. and Cosset, J.-C. (2008) The Political
Determinants of the Cost of Equity: Evidence from Newly Privatized.
AFFI/EUROFIDAI, Paris Finance International Meeting AFFI -
EUROFIDAI. Available at SSRN: http://ssrn.com/abstract=1282194
[19] Olimid. L., Ionaşcu M., Popescu L. and Popescu V. D. (2009),
Corporate Governance in Romania. A Fragile Start, Proceedings of
ECMLG 2009, the 5th European Conference on Management,
Leadership and Governance, held at the ATExcelixi Training and
Conference Centre, Athens, Greece, 5-6 November 2009, 151-156.
[20] Omran, M and
Pointon, J. (2004). ÔÇ×The Determinants of the Cost of
Capital by Industry within an Emerging Economy: Evidence from
Egypt", International Journal of Business, 9(3), 237-258.
[21] Zhu, F. (2009), Cost of Capital and Corporate Governance:
International Evidence, University of Wisconsin, Milwaukee.
http://69.175.2.130/~finman/Reno/Papers/cocfgovff-fn.pdf
@article{"International Journal of Business, Human and Social Sciences:59876", author = "I. Ionascu and M. Ionascu and D.-A. Calu and L. Olimid", title = "Preliminary Views on the Determinants of the Cost of Capital for the Emergent Market of Romania", abstract = "This paper investigates several factors affecting the
cost of capital for listed Romanian companies. Although there is a
large amount of literature investigating the drivers of the cost of
capital internationally, there is currently little evidence from
emergent markets. Based on a sample of 19 Romanian listed
companies followed by financial analysts for the years 2008-2010,
according to Thomson Reuters- I/B/E/S data base, the paper confirms
the international trends, showing that size, corporate governance
policies, and growth are negatively correlated with the cost of capital.", keywords = "Corporate governance, determinants of the cost of
capital, emergent markets.", volume = "6", number = "9", pages = "2414-5", }
