Are carbon emissions priced in equity markets? The literature is split with different approaches yielding conflicting results. We develop a stylized model showing that, if emissions are priced, stock returns depend on expected emissions and the product of the innovation in emissions and the...

We develop a methodology to estimate the cost of capital using credit registry microdata, and apply it to study capital allocation efficiency in the United States. Our measure incorporates the contractual interest rate, expected default probability, recovery rate, and expectations of future...

The paper aims at elucidating and solving the methodological problems around the estimation of the cost of capital in the project finance settings. By convention, capital budgeting analysts evaluate project finance ventures using the free cash flow for equity (FCFE) method, whereby cash flows,...

Expected returns, variances, betas, and alphas are all non-linear functions of the investment horizon. This seems to be a fatal conceptual problem for the capital asset pricing model (CAPM), which assumes a unique common horizon for all investors. We show that under the standard assumptions, the...

In the context of improving the multi-level capital market structure and promoting common prosperity, we examine the impact of NEEQ's (National Equities Exchange and Quotations) tiered system on corporate labour share. We find that the corporate labour share significantly increases when the firm...

The purpose of the Bank for International Settlements regulatory agenda, as implemented by financial regulators globally, has been to make banks safer and reduce the likelihood of systemic events. Using an original model of bank profit maximisation under a regulatory constraint, we statistically...

This study uses a survey approach to investigate how managers associated with thirty (30) firm characteristics subgroups apply thirty-seven (37) investment decision techniques in practice in a frontier market covering: capital budgeting, cost of equity, cost of capital, and adjustments for other...

This research explores the relationship between a company's commitment to Environmental, Social, and Governance (ESG) factors and its capital equity cost (COE) in the Chinese market. Using statistical methods like regression analysis, the study aims to uncover how ESG disclosure relates to COE....

Are carbon emissions priced in equity markets? The literature is split with different approaches yielding conflicting results. We develop a stylized model showing that, if emissions are priced, stock returns depend on expected emissions and the product of the innovation in emissions and the...

This paper finds that an additional percentage point in the ratio of Common Equity Tier 1 (CET1) capital to risk-weighted assets is associated with an increase in the Weighted Average Cost of Capital (WACC) of Chilean banks by a maximum of only 11.7 basis points. This result is found by...

The study aims to test the renewable energy productivity and energy efficiency for energy projects with the role of cost of capital in China from 2009 to 2023. The study examined the results with correlation analysis, cointegration analysis, efficiency analysis, and generalized methods of...

This study investigates the causal impact of stock price crash risk on the cost of equity (COE) in China's segmented A- and B-share markets with an emphasis on ownership structures and market regimes. Employing a bootstrap panel Granger causality framework, Markov-switching dynamic regression,...

Using a novel worldwide dataset of 5,264 syndicated loans issued to 329 firms from 2006 to 2021, we study how climate-related litigation risk affects firm's cost of borrowing. We find robust empirical evidence that firms targeted by climate lawsuits pay significantly higher spreads on their bank...

We examine changes in the corporate tax rate across the U.S. and their implications on the pricing and quantity of loans. We find that the cost of credit decreases (increases) by approximately ten (nine) basis points in response to a one percentage tax cut (hike). The estimates are more...

Taxes represent a significant expense for many companies, prompting a strong incentive to minimize tax liabilities through strategies known as tax avoidance. This research explores the impact of tax avoidance and tax risk disclosure on the cost of debt among companies listed on the Iraqi Stock...

This study uses a novel dataset from 54 countries and regions to explore how exposure to climate change regulatory shocks influences firms' debt costs. The findings reveal that such exposure generally increases the cost of debt. However, this scenario is reversed for firms that find greater...

We analyze how the expiration of a regional bonus depreciation regime in eastern Germany (Development Area Law, DAL) affected real investments and asset structures of establishments in the manufacturing sector. Our rich administrative data allow us not only to identify the aggregate effect, but...

This paper explores the impact of the regulatory leverage ratio (LR) on banks' demand for reserves and thus the pricing of overnight liquidity in the euro area money markets. We use daily transaction-level money market data during the period between January 2017 - February 2023 and examine the...