Open AccessA New And Better Way To Measure The Cost Of Equity Capital For Small Closely Held Firms
Author(s) -
Denis O. Boudreaux,
S. P. Uma Rao,
Jim Underwood,
Nancy C. Rumore
Publication year - 2011
Publication title -
journal of business and economics research
Language(s) - English
Resource type - Journals
eISSN - 2157-8893
pISSN - 1542-4448
DOI - 10.19030/jber.v9i1.945
Subject(s) - valuation (finance) , equity (law) , economics , span (engineering) , accounting , political science , engineering , civil engineering , law
The purpose of this paper is to explore the theoretical structure that underlies the valuation process for small closely held firms. Specifically, cost of capital estimate methods which appear in the current literature are examined, and a theoretically correct and simple method to measure cost of equity capital for privately held companies is offered.