Cost of Capital: an Approach of the Investors Ezplanatory Capability
The paper models the effects between the investors information explanatory capability (IEC) and the cost of capital theoretically basing on a new approach of the investors IEC. The results show that the differences among investors IEC are one of the major sources which affect the expected return required, namely the cost of capital on a security. Specially, when a new information release occurs, the higher the IEC of the investors taking as a whole, and the lower the information dominance of the professional investor over the non-professional one, the lower the influence of the professional investors IEC may exert on the equilibrium price. The higher the professional ones IEC, and the larger the discrepancy of IEC between the professional and the non-professional, the higher the cost of capital. Furthermore, the cost of capital is assumed negatively related to the proportion of the professional investors.
cost of capital the professional investor the information ezplanatory capability (IEC)
Zhiyong HU Aimin LI
School of Business, Guangzhou University, Guangzhou, 510006, China South China Institute of Software Faculty of Mathematics and Information Science, Guangzhou University, Guangzhou, 510006, China
国际会议
第八届武汉电子商务国际会议(The Eighth Wuhan International Conference on E-Business)
武汉
英文
1296-1305
2009-05-30（万方平台首次上网日期，不代表论文的发表时间）