GAPS IDENTIFIED IN ECONOMETRIC MODELS FOR COST OF CAPITAL ESTIMATION ALREADY BUILT

Maria Pascu-Nedelcu

Journal of Doctoral Research in Economics, 2011, vol. 3, issue 2, 49-58

Abstract: Applying mathematical models to assess the cost of capital is frequently used for investments in marketable assets in the stock market. Using these models to substantiate investments management decisions has to provide accurate estimations of future yields or otherwise, to eliminate the uncertainty specific for the financial environment. This paper is part of a complex research on econometric models of estimation that identifies weaknesses of the already built models, bringing empirical evidence on these controversies identified and justifying the lack of confidence expressed by managers on econometric estimation methods used for financial results. Research results point to the controversies that need to be eliminated or minimized when building a new econometric model to estimate the cost of capital.

Keywords: risk free rate; risk premium; volatility coefficient; emerging capital markets (search for similar items in EconPapers)
JEL-codes: C18 C51 D83 (search for similar items in EconPapers)
Date: 2011
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