Estimating the Portuguese Average Cost of Capital

da Costa, José Rodrigues; Mata, Maria Eugénia; Justino, David
In spite of the importance of having a figure for the domestic average cost of capital to bare the estimates of the discount rates used in a number of long-term investments, the fact is that Portugal does not yet know with confidence its own value. Part of the answer might be ...
published 2012-06, Version 1
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Text : Journal article

Version

1

Language of Resource

English

Titles

Title

Estimating the Portuguese Average Cost of Capital

Collective Title

  • Historical Social Research/Historische Sozialforschung, Vol. 37, No. 2 (2012)

Origin Information

Publication Date

2012-06

Publication Place

Cologne

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Rights

CC BY 4.0

Contributor

GESIS - Leibniz-Institut für Sozialwissenschaften

Description

  • Abstract

    In spite of the importance of having a figure for the domestic average cost of capital to bare the estimates of the discount rates used in a number of long-term investments, the fact is that Portugal does not yet know with confidence its own value. Part of the answer might be attached to the number of profound impacts that affected and disturbed its capital markets during the twentieth century, in particular the break introduced by the Carnation Revolution in 1974. This paper translates both a test to the methodology necessary to make such an estimate under the Portuguese constraints, and also a first estimate of such a figure. From the daily data available for the quotations of shares listed in the Lisbon Stock Exchange, a time series of a comprehensive index is constructed covering an a weekly basis (Wednesdays) a time sample of 31.5 years, from January 1978 to June 2009. It also constitutes the first part of a 3- year project intended to study the entire twentieth century and to produce an estimate for the cost of capital comparable to the values included in the 2002 book 'The Triumph of the Optimists' authored by Dimson, March and Staunton. Although the output parallels traditional UK and USA figures, the Portuguese estimate for the equity return premium is around 8%.
  • Series Information

    Historical Social Research Vol. 37, No. 2 (2012): Special Issue: Political and Functional Elites in Post-Socialist Transformation: Central and East Europe since 1989/90

    Starting Point and Frequency: Year: 1979, Issues per volume: 4, Volumes per year: 1

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  • Is part of
    URL: https://www.gesis.org/en/hsr/archive/2012/372-elite-transformation/
  • Is part of
    ISSN: 0172-6404

Update Metadata: 2017-12-13 | Issue Number: 2 | Registration Date: 2017-10-26