Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management
This paper conducts a comprehensive analysis of the Cost of Equity Capital (COE), crucial for guiding corporate finance and investment decisions. It delves into a variety of models for estimating COE, including the Residual Income Model (RIM), Price/Earnings to Growth (PEG) ratio, and Capital Asset...
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| Format: | Article |
| Language: | English |
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International Journal of Academic Accounting, Finance & Management Research(IJAAFMR)
2024
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| Online Access: | http://psasir.upm.edu.my/id/eprint/119160/ http://psasir.upm.edu.my/id/eprint/119160/1/119160.pdf |
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| author | Saidin, Saidatunur Fauzi Al-qadi, Maher Azzam Ghaleb Abdul-hamid, Mohamad Ali Abdelrehim, Mahmoud |
| author_facet | Saidin, Saidatunur Fauzi Al-qadi, Maher Azzam Ghaleb Abdul-hamid, Mohamad Ali Abdelrehim, Mahmoud |
| author_sort | Saidin, Saidatunur Fauzi |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This paper conducts a comprehensive analysis of the Cost of Equity Capital (COE), crucial for guiding corporate finance and investment decisions. It delves into a variety of models for estimating COE, including the Residual Income Model (RIM), Price/Earnings to Growth (PEG) ratio, and Capital Asset Pricing Model (CAPM), each examined for its theoretical basis, assumptions, and relevance to market expectations and corporate performance. Beyond traditional financial metrics, the study expands to consider the impact of corporate governance and non-financial determinants such as corporate social responsibility (CSR) and environmental sustainability on COE. It highlights how these factors significantly influence investor perceptions and risk evaluations, thereby affecting the COE. Through analysis of empirical research, the paper illustrates the relationship between strong governance, CSR initiatives, and reduced equity costs, advocating for an integrated approach that balances financial performance with societal contributions. The findings suggest a need for further exploration into the interactions between financial and non-financial factors to enhance COE estimation methods and encourage corporate practices that promote sustainable development and social welfare. This synthesis underscores the complexity of COE estimation and calls for a holistic valuation strategy that aligns economic objectives with broader societal goals. |
| first_indexed | 2025-11-15T14:43:41Z |
| format | Article |
| id | upm-119160 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T14:43:41Z |
| publishDate | 2024 |
| publisher | International Journal of Academic Accounting, Finance & Management Research(IJAAFMR) |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-1191602025-08-07T00:30:30Z http://psasir.upm.edu.my/id/eprint/119160/ Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management Saidin, Saidatunur Fauzi Al-qadi, Maher Azzam Ghaleb Abdul-hamid, Mohamad Ali Abdelrehim, Mahmoud This paper conducts a comprehensive analysis of the Cost of Equity Capital (COE), crucial for guiding corporate finance and investment decisions. It delves into a variety of models for estimating COE, including the Residual Income Model (RIM), Price/Earnings to Growth (PEG) ratio, and Capital Asset Pricing Model (CAPM), each examined for its theoretical basis, assumptions, and relevance to market expectations and corporate performance. Beyond traditional financial metrics, the study expands to consider the impact of corporate governance and non-financial determinants such as corporate social responsibility (CSR) and environmental sustainability on COE. It highlights how these factors significantly influence investor perceptions and risk evaluations, thereby affecting the COE. Through analysis of empirical research, the paper illustrates the relationship between strong governance, CSR initiatives, and reduced equity costs, advocating for an integrated approach that balances financial performance with societal contributions. The findings suggest a need for further exploration into the interactions between financial and non-financial factors to enhance COE estimation methods and encourage corporate practices that promote sustainable development and social welfare. This synthesis underscores the complexity of COE estimation and calls for a holistic valuation strategy that aligns economic objectives with broader societal goals. International Journal of Academic Accounting, Finance & Management Research(IJAAFMR) 2024 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/119160/1/119160.pdf Saidin, Saidatunur Fauzi and Al-qadi, Maher Azzam Ghaleb and Abdul-hamid, Mohamad Ali and Abdelrehim, Mahmoud (2024) Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management. International Journal of Academic Accounting, Finance & Management Research, 8 (3). pp. 89-102. ISSN 2643-976X http://ijeais.org/wp-content/uploads/2024/3/IJAAFMR240308.pdf |
| spellingShingle | Saidin, Saidatunur Fauzi Al-qadi, Maher Azzam Ghaleb Abdul-hamid, Mohamad Ali Abdelrehim, Mahmoud Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management |
| title | Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management |
| title_full | Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management |
| title_fullStr | Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management |
| title_full_unstemmed | Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management |
| title_short | Assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management |
| title_sort | assessing the dynamics of cost of equity: a critical literatures of its determinants, models, and implications for financial management |
| url | http://psasir.upm.edu.my/id/eprint/119160/ http://psasir.upm.edu.my/id/eprint/119160/ http://psasir.upm.edu.my/id/eprint/119160/1/119160.pdf |