Hou, Kewei; Dijk, Mathijs A. van; Zhang, Yinglei - Charles A. Dice Center for Research in Financial … - 2010
We propose a new approach to estimate the implied cost of capital (ICC). Our approach is distinct from prior studies in that we do not rely on analysts' earnings forecasts to compute the ICC. Instead, we use a cross-sectional model to forecast the earnings of individual firms. Our approach has...