Cost of Capital-The Effect to Firm Value and Profitability Performance in Malaysia

Nor Edi Azhar Binti Mohamad () and Noriza Binti Mohd Saad ()
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Nor Edi Azhar Binti Mohamad: College of Business Management & Accounting UNITEN
Noriza Binti Mohd Saad: College of Business Management & Accounting UNITEN

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2012, vol. 2, issue 4, 353-361

Abstract: Firm's cost of capital is determined in the capital markets and is closely related to the degree of risk associated with new investments, existing assets, and the firm's capital structure. It is an overall return that a corporation must earn on its accessible assets and business operations in order to augment or preserve the value of its current stock. Thus a careful approximation of a firm's specific financing and weighted-average cost of capital (WACC) is essential for a good financial management. Thus study highlights the effect of cost of capital towards firms’ value and profitability for a sample of 415 listed companies in main market Bursa Malaysia for 6 years basis from 2005 to 2010. The result of the study shows significant relationships exist between cost of capital with firm value and profitability.

Keywords: Weighted-average cost of capital; Tobin Q; Return on Asset and Z-Score (search for similar items in EconPapers)
JEL-codes: D24 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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