IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v9y2003i4p201-209.html
   My bibliography  Save this article

An evaluation of airline beta values and their application in calculating the cost of equity capital

Author

Listed:
  • Turner, Sheelah
  • Morrell, Peter

Abstract

This paper focuses on the calculation of the cost of equity capital in a sample of airlines, in comparison to industry-calculated values. The approach usually taken is to apply the Capital Asset Pricing Model to airline stock prices and market indices. The research shows that the calculated β values are sensitive to the precise methodology and calculations used. Further, the low regression model fits indicate the Capital Asset Pricing Model may not be the most suitable model for β value calculations. The emerging β values are lower than expected, and possible causes of this are discussed.

Suggested Citation

  • Turner, Sheelah & Morrell, Peter, 2003. "An evaluation of airline beta values and their application in calculating the cost of equity capital," Journal of Air Transport Management, Elsevier, vol. 9(4), pages 201-209.
    • Handle: RePEc:eee:jaitra:v:9:y:2003:i:4:p:201-209
    DOI: 10.1016/S0969-6997(02)00085-6
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699702000856
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/S0969-6997(02)00085-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Button, Kenneth, 2005. "A simple analysis of the rent seeking of airlines, airports and politicians," Transport Policy, Elsevier, vol. 12(1), pages 47-56, January.
    2. Gong, Stephen X.H., 2007. "Bankruptcy protection and stock market behavior in the US airline industry," Journal of Air Transport Management, Elsevier, vol. 13(4), pages 213-220.
    3. Singh, Kewal & Singh, Anoop & Prakash, Puneet, 2022. "Estimating the cost of equity for the regulated energy and infrastructure sectors in India," Utilities Policy, Elsevier, vol. 74(C).
    4. Gong, Stephen X.H. & Firth, Michael & Cullinane, Kevin, 2006. "The information content of earnings releases by global airlines," Journal of Air Transport Management, Elsevier, vol. 12(2), pages 82-91.
    5. Lee, Chyn-Hwa & Hooy, Chee-Wooi, 2012. "Determinants of systematic financial risk exposures of airlines in North America, Europe and Asia," Journal of Air Transport Management, Elsevier, vol. 24(C), pages 31-35.
    6. Chuang, I-Yuan & Lu, Jin-Ray & Chen, Ching-Fu, 2006. "Estimating the systematic risk of airlines: A methodological comparison," Journal of Air Transport Management, Elsevier, vol. 12(2), pages 103-105.
    7. Hung, Jung-Hua & Liu, Yong-Chin, 2005. "An examination of factors influencing airline beta values," Journal of Air Transport Management, Elsevier, vol. 11(4), pages 291-296.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:9:y:2003:i:4:p:201-209. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.