The equity risk premium calculation based on European data

Výpočet rizikové prémie kapitálového trhu na základě evropských dat

Jan Marek

Oceňování, 2025, vol. 18, issue 1, 33-46

Abstract: The article focuses on estimating the equity risk premium when valuing companies located in the Czech Republic and other European countries with comparable risk profiles. It highlights key challenges associated with traditional data sources, particularly from the U.S. market, which may lead to distorted estimates. The article presents a calculation of the implied equity risk premium based on current data from European companies with similar risk characteristics. This calculation, performed using the bottom-up approach, eliminates the need for additional premiums for country risk and company size. Estimates of the implied equity risk premium for large and mid-sized companies are regularly updated and published on the European Valuation Institute website (www.evalin.org).

Keywords: Discount rate; Cost of equity; Equity risk premium; Implied equity risk premium; Company valuation; Diskontní míra; Náklady vlastního kapitálu; Riziková prémie kapitálového trhu; Implikovaná riziková prémie kapitálového trhu; Ocenění podniku (search for similar items in EconPapers)
JEL-codes: G12 G32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.18267/j.ocenovani.299

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