Reseña

In this book, we estimate the differences between expected (predicted) cost of equity generated by nine methods of the discount rate proposed in the literature, and observed stock returns (as proxied by observed total stock returns), and then determine whether these differences can be explained by country and industry factors. We applied nine methods already proposed in the literature to calculate the cost of equity of companies from the largest stock markets in Latin America. We found a strong correlation between the results yielded by some of these methods. We then applied an econometric test based on categorical variables to determine whether the estimated cost of equity is influenced by country and industry effects. We found that industry effects are more important than country effects. It gives empirical evidence for specific country and industry determinants of the cost of equity that are not explicitly treated in the extant literature.