John Douglas Hancock
University of Pennsylvania
NBER Working Papers and Publications
|January 1997||Cost of Capital for the United States, Japan, and Canada: An Attempt at Measurement Based on Individual Company Records and Aggregate National Acccoun|
with Albert Ando, Gary Sawchuk: w5884
A conceptual basis is laid out for measuring the cost of capital for corpora- tions from data typically available in countries such as the US, Canada, and Japan. Attempts are made to carry out the measurement based both on the accounting records of individual companies and on the aggregate National Accounts data, supplemented by the market information on the price of equity shares. We find a consistent pattern for the US from both sets of data, and the real cost of capital after depreciation and before taxes is found to fluctuate around 10-11% without a persistent trend. For Canada, the indivi- dual company data cover too few companies for too short a period to produce reliable estimates. The aggregate National Accounts data for Canada supple- mented by some unpublished data supplied by...