Abstract
The current survey research was conducted to identify and investigate
the differences in theory and practices of capital budgeting decision
(cost of equity capital approaches) in corporate sector of Pakistan.
Developed countries researchers conducting regular surveys to
highlight and minimize the gap between theory and practice, specially,
US/UK finance researchers while, developing countries researchers
has not shown much interest in this regard. Under the Positivist
philosophical approach, this study has adopted quantitative survey
method of research. The data was collected through convenient
sampling from 173 CFOs/Directors Finance at one point in time. For
analysis ordinal logistic and binary logistic regression was used. In
case of cost of equity calculation approaches most of the firms depends
upon the historical return on common stock approach than CAPM.
CFOs adjust the discount rate for inflation risk and bankruptcy risk
more frequently than for other risk factors.
Umar Siddique, Fateh Ullah, Sajid Rahman Khattak, Muhammad Tariq. (2019) Determinants of Cost of Equity Capital Approaches: Evidence from Pakistan, The Dialogue, Volume 14, Issue 2.
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