A Survey of External and Internal Factors Influencing the Cost of Equity

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dc.contributor.authorMokhova, Nataliacs
dc.contributor.authorZinecker, Marekcs
dc.coverage.issue2cs
dc.coverage.volume30cs
dc.date.accessioned2021-09-30T14:56:19Z
dc.date.available2021-09-30T14:56:19Z
dc.date.issued2019-05-02cs
dc.description.abstractThe cost of equity is an essential element of a business' financial decision-making process, which is influenced by a number of internal and external factors. This study intends to answer the question on how Czech CFOs perceive the impact of overall-economic and firm-specific factors on the cost of equity. The survey was carried out in 2015 and our sample covers 40 respondents. The findings show that there is a gap between the theory and practice and that the country’s specifics, in particular the low level of the financial market development, play a significant role in the perception of cost of equity capital determinants. First, the most commonly used cost of equity estimation approach is based on average historical returns. A considerably large number of the CFOs think that the ownership structure, dividend policy, ability to forecast financial results, stability of company´s earnings and flexibility in capital raising are the internal factors with the most significant impact on the cost of equity. Otherwise, a rather low number of respondents consider the information asymmetry, corporate governance and financial performance as having a strong influence on the cost of equity. In regard to the external factors, a substantial majority of the respondents acknowledges that the long- and short-term interest rates as well as inflation, sovereign debt and risks linked to the banking system and financial market strongly affect the cost of equity.en
dc.formattextcs
dc.format.extent173-186cs
dc.format.mimetypeapplication/pdfcs
dc.identifier.citationEngineering Economics. 2019, vol. 30, issue 2, p. 173-186.en
dc.identifier.doi10.5755/j01.ee.30.2.19221cs
dc.identifier.issn1392-2785cs
dc.identifier.other157975cs
dc.identifier.urihttp://hdl.handle.net/11012/201693
dc.language.isoencs
dc.publisherKAUNAS UNIV TECHNOLcs
dc.relation.ispartofEngineering Economicscs
dc.relation.urihttp://inzeko.ktu.lt/index.php/EE/article/view/19221cs
dc.rightsCreative Commons Attribution 4.0 Internationalcs
dc.rights.accessopenAccesscs
dc.rights.sherpahttp://www.sherpa.ac.uk/romeo/issn/1392-2785/cs
dc.rights.urihttp://creativecommons.org/licenses/by/4.0/cs
dc.subjectCost of Equity; Capitalen
dc.subjectExternal Factors; Internal Factorsen
dc.subjectEconomic Policyen
dc.subjectFinancial Stabilityen
dc.subjectDisclosureen
dc.subjectCorporate Governanceen
dc.subjectSocial Factorsen
dc.subjectSurveyen
dc.subjectCzech Republicen
dc.titleA Survey of External and Internal Factors Influencing the Cost of Equityen
dc.type.driverarticleen
dc.type.statusPeer-revieweden
dc.type.versionpublishedVersionen
sync.item.dbidVAV-157975en
sync.item.dbtypeVAVen
sync.item.insts2021.09.30 16:56:18en
sync.item.modts2021.09.30 16:15:12en
thesis.grantorVysoké učení technické v Brně. Fakulta podnikatelská. Ústav ekonomikycs
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