Contents

The equity premium puzzle: empirical evidence for the "Korea Discount"

Choi, Tae H. / Lee, Eunchul / Pae, Jinhan

Abstract

This study examines the cost of equity capital (COC) and the factors that influence the COC of listed Korean companies, and compares the COC of Korean companies with that of companies from 31 selected countries. The major research question is whether companies that are listed in an emerging market have a disadvantage as they are underpriced through a higher COC (as compared with companies that are traded in developed markets). Consistent with the "Korea Discount," we find that the COC is significantly higher for Korean companies than for companies in other countries after controlling for other relevant factors. However, the "Korea Discount" has significantly eased in recent years.

Issue Date
2012
Publisher
ROUTLEDGE JOURNALS
Keywords
MARKET EQUILIBRIUM; EARNINGS FORECASTS; DISCLOSURE LEVEL; EXPECTED COST; ASSET PRICES; IMPLIED COST; RISK; GROWTH; INFORMATION; PERFORMANCE
DOI
10.1080/16081625.2012.667378
Journal Title
ASIA-PACIFIC JOURNAL OF ACCOUNTING & ECONOMICS
Start Page
143
End Page
166
ISSN
1608-1625
Language
English
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