Impacts of Cost of Capital on Firm Value and Profitability: Insights from the Cement Industry in Bangladesh

Md. Mehedi Hasan, Dr. Md. Hasan Uddin and Azom Khan
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Md. Mehedi Hasan: Professor Department of Finance and Banking, Patuakhali Science and Technology University, Dumki; Patualhali; Bangladesh
Dr. Md. Hasan Uddin: AVP, Bank Asia Limited, Bangladesh

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 1, 890-899

Abstract: The assessment of investments made by a company necessitates the consideration of the cost of capital. This study aims to evaluate and scrutinize how individual components of the cost of capital impact both firm value and profitability. The research sample comprises cement companies listed on the Dhaka Stock Exchange (DSE) during the period from 2016 to 2022. All data utilized in this study were sourced from the Bangladesh Bureau of Statistics (BBS), Dhaka Stock Exchange databases, and the annual reports of the selected companies. The analytical methodology encompassed descriptive, correlation, and ordinary least squares regression analyses. Contrary to expectations, the empirical findings of this study indicate that firm value and profitability do not appear to be influenced significantly by the cost of capital. Instead, the Total Debt Ratio (TDR) demonstrates a negative impact on firm profitability and a positive effect on firm value.

Date: 2024
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